Hi cloudyautumn!
Making mods can be alot of fun. First you need an image editing program. Modding jpg images are easy but for png images (like the head files in Virtual Families) you need an image editing program that supports transparencies. Otherwise your peeps will have a square block around their head.
A number of forum members have used a free image editing software called Gimp to create their mods. Gimp supports transparencies and is free to download.
There are a number of tutorials available online that can help you learn how to use the software. There are also a couple of Gimp tutorials that other forum members have created. You can find them in the Virtual Families Mod Forum
here and in the Virtual Families Guide
here.
Of course you are free to choose whatever program you feel comfortable using.
Good luck!