Adding labels (categories) to your blog posts

When creating a new post or editing old posts, add labels (separated by commas) in the bottom right where it says 'Labels'. 

Then Add a Gadget called 'Labels' to your Sidebar.  Configure and save.

Adding Gadgets to your Blogger Blog

From your Blogger Dashboard, click Design

Make sure your on the 'Page Elements' Tab

Click 'Add a Gadget' on the side bar

Look through the different categories, select gadgets of interest

Adjust settings if deisred. Then Click 'Save'.

Click and drag the gadget into the order you want.

Click Save again in the upper right.