First this is an excellent way to make a quick gift from scrap fabric or old clothing. Also if you re making your own clothes you can make a hair tie to match the outfit!
1) cut a piece of fabric 4 inches wide and at least 14 inches long (16 to 20 inches is best)
2) Fold fabric in half length wise so the pattern side is in. Now you have a piece of fabric 2 inches by 14 ish inches.
3) Sew along the long side to make a tube of fabric, with a matching thread.
4) Turn fabric inside out so the "pretty" side is now out.
5) Insert 5 to 10 inches (depending on how tight you want the scrunchie to be) of 1/2-inch-wide (or 1/4 inch) elastic through the tube, holding one end as you thread the other. A safety pin stuck through the end of the elastic can make it easier.
6) Stitch elastic at one end.
7) Make a small hem at other end of tube, and insert sewn end into it. Pin and sew.
I will try to get photos of this up soon!