First things first, I use a drawing tablet (which gives me pressure sensitivity) and few self made fur brushes in Photoshop. They are much more convenient and much less time consuming than drawing each individual piece of hair.
Make several dots on a canvas and go to edit>>define brush and that will create your brush. Then make sure in the brushes tab Shape dynamics is checked and in Brush tip shapes change the spacing to 1% you now have nice fur brush. I recommend making several other brushes of different shapes as well, this will give your fur more variety and it won't all look alike.
1. At the moment I have my background on one layer and I'm drawing my fur another.
Using a brush I start off filling in the base fur colors. My personal brush preference is the Hard Round #19 brush set to wet edges. It makes for a nice watercolor look.
Start by making fast strokes in the direction of which the fur is flowing.
2. Continue on until the whole area is filled. You don't want to completely color everything because notice how the brush already begins to show clumping. Hair naturally clumps and it will make your fur look more realistic.
3. Now we are going to bring out those clumps and bring more of a shape to them by adding in some shadows with a semi darker color than your base color. This makes it appear like there's some separation in the fur and also helps us to know where to start drawing our detailed and individual pieces of fur.
4. You can either create a new layer or personally I just like to stay on the same layer. If you are afraid you might ruin something than I'd create a new one. However I like having all of my fur on just one layer. Using a variety of fur brushes I will start filling in the hair.
For now I'm just using that one brush that we made earlier to start off with and a darker colored brown. Follow the path of your base colors.
And you should have something like this.
5. Once again, on the same layer I begin adding some highlighting; notice I'm not fully coloring over the other hair I just made
6. Then I come back with some shading once more by using a darker color. I like to periodically use different sets of fur brushes. Notice how if you continue to use the same one everything looks the same. Not all hair is identical. There are short fat hairs, thick hairs, and light fluffy hairs and for the sake of realism switching to different sized and shaped brushes will help. And once again I'm using the dark color to separate my fur clumps. If you color it right the fur should already be partially separated/clumped so all you have to do is find those separations and fill it in with darker fur colors.
7. Still separating and fixing hair clumps while also adding in some individual pieces of hair. Not all hair flows in one direction so I add some individual pieces of hair to stand in different directions.
8. Continue repeating those steps until you are satisfied and when you zoom out you should have some mighty impressive fur.