You can click "customize" from the blogspot bar on top of your blog, or click the "layout" link on your dashboard, and you'll get to a screen that has something like this near the top:
Take a little time to click each of the tabs and see what's on them. Below each tab is a selection of links for that tab. There are many customizable features to your blog, and making your blog unique will impress your visitors.
Once you've given yourself an overview of the customization, click on the "Monetize" tab and select one of the three choices there (I recommend accepting the top one) and click the orange button at the bottom to confirm your choice. There are several ways to customize the monetization, and we'll return to that later.
Now click on the "Layout" tab and get a screen that has this in the middle:
Familiarize yourself with the different sections of your blog's page. Essentially, there's a top, side, middle (where the blog entries will be), and bottom (or footer). The top section is where your blog's title and description will be. If you've not already done so, click on the edit link to add a description to your blog.
Remember this page from Google's free keyword tool:
If you didn't print it out (or export the contents to a file on your pc), you can always revisit the link and enter your primary keyword again. The reason for this is to find related keywords that you can work into your description. There will be other places to use these, so I like to print out the pages and highlight the ones that are both applicable to my site's content and are easy to work into text.
The next thing I like to do is click the "Add a Gadget" link for the top section (you'll want to do this for all sections, but this is as good a place as any to start). Look at all the choices available. Some of this are more appropriate for some sections of your blog than others. For the sake of appearance and functionality, I like to add just two "gadgets" to the top section of my blog: AdSense and Text.
Click the plus sign next to AdSense, and a small window will pop up that lets you customize the AdSense gadget on top of your blog page. It's your choice, but I prefer banners here. Depending on the template you chose, you may go with a 468x60 banner or a 728x90 leaderboard. Leave the button set to text and images, and accept the blending color choices by clicking the orange "Save" button in the bottom right corner of the window.
You can add the text now, or save this step for later. Whenever you do it, bear in mind why you're doing it. The text will greet your visitors - both people and search engines - and tell them more about your site than you were able to fit in the description below the title. Be sure to refer to your keyword list, and include several related keywords that not only provide a more thorough description of your site, but helps AdSense know what ads to include?
What? How does AdSense know what ads to put on my page?
Google's AdSense is context-sensitive. Google will read your page and guess what it's about from your content. It will then choose ads that relate to your content, and thus appeal to your visitors. That's another reason it's very important that you use high-value, related keywords in your title, description, text, and even your posts.
Now look at the gadgets on the side of your layout page. This is another great place for an AdSense gadget. I like one of the vertical banners (either 160x600 or 120x600), but you may opt for the 125x125 button.
The side is also where I like to include the search box, blog archive, and sometimes my profile (if you choose to create a blogspot profile, it can appear on as many of your blogs as you choose, but it will be the same one for each blog, so make one that's appropriate for all of them).
Continue around the layout page and customize each section to your liking. You can always come back later and change these so don't worry that you're committed to any choices you make.
As far as AdSense goes, your page is limited to three ads. If you have one at the top and one on the side, then only one will appear between posts (if you choose that option) or bottom of the screen. If you select AdSense for more places, then some will be blank.
Next: Adding content.
