sudo apt-get update
sudo apt-get install postgresql postgresql-contrib libpq-dev

sudo -u postgres createuser -s pguser
sudo -u postgres psql
\password pguser

create database projectname_development;
create database projectname_test;

grant all privileges on database projectname_development to username;
grant all privileges on database projectname_test to username;

In database.yml
development:
  adapter: postgresql
  encoding: utf8
  database: name
  username: hading
  password: my_db_password
  pool: 5 # not mandatory
  timeout: 5000 # not mandatory
  host: localhost
  port: your postgresql port number (5432 or 5433)