1. Login and go to your blog’s Dashboard and click on ‘Posts’ and ‘Categories’.
2. Fill out the ‘Add Category’ form. You will need to add at least a ‘Category Name’.
   1. Note that you can create a hierarchy of categories by selecting a parent category.
3. Click on the ‘Add Category’ button to create your new category.

Now when you create a new post or edit an existing one you can assign it to that category.  Note that any given post can be assigend to more than one category.