Set Permalinks

Already covered in the Basic Settings but included again here just to be sure.
Open the Settings menu and click on Permalinks.

Click the radio button beside Day and Name.

This setting is most efficient in terms of Wordpress operation, prevents frustrations for users and search engines alike and allows you to change the organisation of your blog in the future by changing Pages, Categories and Tags without having to worry about the Permalink.

Don't forget to Save Changes.