By default your iTunes library folder is in your home folder. For me its - /Users/josephtylerjones The original library folder is called Music, but you can name it whatever you'd like. For the sake of this guide, I called it Music2.
Now click "Create Library..." and choose the music folder you just created. In my case it was "Music2". After you've selected your folder click "Save" and now you've got a new folder for your iTunes library!