1. Create the 404 page you would like to use in your web design application.
2. Rename your page: 404.shtml (note the s before html). (Please note that many template based design application, like iWeb for example, will not allow you to rename your page to include the .shtml extension).
3. Upload the 404.shtml directly inside your public_html folder using a standalone FTP application like Transmit or CyberDuck. Instructions can be found HERE.
4. Type an address at your site you know doesn't exist (i.e. http://www.examplename.com/doesnotexist replacing exampledomain.com with your actual domain name). You should see the custom 404 page you created show up.