I will look at the obvious cases first. These are where we deliberately shorten a word or phrase and then use an apostrophe to show that letters are missing.
These are called contractions.
| In full | Letters missing | Shortened form |
| do not | o | don't |
| can not | no | can't |
| could not | o | couldn't |
| let us | u | let's |
| that is | i | that's |
| would not | o | wouldn't |
| they are | a | they're |
| they had | ha | they'd |
| you would | woul | you'd |
| we had | ha | we'd |
| you are | a | you're |
| I am | a | I'm |
| was not | o | wasn't |
| it is | i | it's |
| it has | ha | it's |
| what is | i | what's |
| my car is there | i | my car's there |
| the coat is on the peg | i | the coat's on the peg |
| Tom is going out. | i | Tom's going out. |
The list above does not contain every possible abbreviated form, but from that one can see how the apostrophe goes in place of the missing letters. Missing spaces do not get an apostrophe. Think of it this way, it was a space so there was nothing to go missing in the first place!
People often confuse you're and your. But now you know the rule, you need never confuse them again! You're is short for You are, while your means belonging to you, as in "your head is probably spinning by now".
There, their and they're are often confused but there is a place, their means belonging to them and they're is short for they are.
English is a living language, and all such languages contain irregularities. One which is relevant to apostrophe usage is it's and its. It's is short for it is or it has as you see in the table above. Its means belonging to it, as in "It's probably spun off its neck by now". If you are uncertain which to use, say it in full, e.g. "The world spins on it is axis" is plainly silly, so one should use its rather than it's.
I have mentioned belonging already. So what about possessives, I can hear you saying to your computer screen? It is in fact the same rule.
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