This tutorial assumes that you already have uploaded the video to your YouTube channel and that you already have a written transcript of the audio from your video. If you have an .srt file that you need to synchronize with your video, see Adding Caption Files to YouTube Videos. If you do not have a transcription file prepared, use the Creating Captions in YouTube from Scratch tutorial instead.
Make sure that your transcript is saved as a .txt file. You can save it as a .txt file in either TextEdit (Mac) or Notepad (Windows).
You can adjust the start and end times of each caption at the bottom of the screen by clicking & dragging on the edges of the white boxes with text. The audio signal is shown in grey behind the white text boxes to help find where the audio begins and ends. Hit Shift-Enter to add a line break; you should have no more than 2 lines of text in your captions. Try to split up your captions by complete phrases.