Memory is a complex process that includes three phases: encoding (deciding what information is important), storing, and recalling. Different areas of the brain are involved in memory depending on the type of memory.
Short-term memory stores information for about one minute and its capacity is limited to about 7 items. For example, it enables you to dial a phone number someone just told you. It also intervenes during reading, to memorize the sentence you have just read, so that the next one makes sense.
Long-term memory is activated when you want to memorize something for a longer time. This memory has unlimited content and duration capacity. It contains personal memories as well as facts and figures.
Skill memory is processed in the cerebellum, which relays information to the basal ganglia. It stores automatic learned memories like tying a shoe, playing an instrument, or riding a bike.