1. __Instance__ variables (declared in a class).

2. __Local__ variables (declared inside a method).

Instance variables and objects reside in heap whereas local variables reside in stack. Consider the below program:

{% highlight java linenos %}

class Collar {

}

class Dog {

Collar c; // instance variable

String name; // instance variable

public static void main(String[] args) {

Dog d; // local variable: d

d = new Dog();

d.go(d);

}

void go(Dog dog) { // local variable: dog

c = new Collar();

dog.setName("Aiko");

}

void setName(String dogName) { // local var: dogName

name = dogName;

// do more stuff

}

}

{% endhighlight %}

For the above program, the instance variables, objects and local variables will be stored in memory as shown in the

figure below: