I am writing a Java application which can \"encrypt\" and consequently \"decrypt\" whatever binary file.
I am just a beginner in the \"cryptography\" area so I would
Use the password to encrypt your data. You could for example repeat the password so that it matches the byte array's length and then do something like
data[i] = data[i] >> password[i];
Edit: if you wanted to store the password, you would have to encrypt it. Which - at least when using symmetrical cryptosystems - will be inherently insecure.