When you click on the image two icons appear, one is an icon of a picture (image settings) and the other a red circle with a slash through it (delete). Click the image settings icon and adjust the size by clicking the percentage button next to the image. Notice the values in the size field below changes. Choose the percentage that reduces the width value down to about width 500 (this may vary depending on the theme you are using).
Avoid manually changing the width and height unless you know what you are doing, or the image will appear distorted. Click update on the image settings interface and update on the edit post interface.
You may also adjust the size of the image by clicking on the image through the Edit Post visual editor and using the border boxes to re-size. Notice that when you click on an image while in the Edit Post visual editor, lines outline the image and square boxes appear at the edges of the outline. Click on one of the boxes that appear at the corner of the image and drag the box in either direction to re-size the image as desired. Click update on the edit post interface. You may need to adjust the image again, depending on how this displays in the theme you are using.