Encryption is used to secure data that others shouldn't be able to read; for example, social security numbers (SSN) or financial data. These are suggested methods for using encryption on a Macintosh, but they should always be used with discretion and caution. (You don't want to lock yourself out from the information either.) It is also highly advisable to make a backup of your information before implementing.
A. Secure disk images
You can create an encrypted disk image and save all your sensitive (financial, SSN) information on this image. This way, if your Macintosh should be stolen, the files on the image will be inaccessible without your login password.
Mac OS 10.3/10.4/10.5/10.6
Mac OS 10.2
You can add this image to your login items to have it open whenever you login to your account:
Mac OS 10.3/10.4/10.5/10.6
Mac OS 10.2
Now, each time you login to your Macintosh, you will automatically be prompted for the password to your encrypted disk image, and it will then mount on the desktop.
B. FileVault
FileVault is only available in Mac OS 10.3 and higher.
FileVault is mainly recommended for laptops. Use this option only if you have a lot of highly sensitive data (financial, SSN) on your hard drive, and it's too cumbersome to use an encrypted disk image.
FileVault works by creating an encrypted image of your Home folder. [Your Home folder includes anything on the desktop, but not files or folders on the top level of your hard drive.] When you enable FileVault, an encrypted image is created, and then all the files within your Home folder are copied to this encrypted image. Your unencrypted Home folder is then erased from your hard drive. If you choose the secure erase option, your unencrypted Home folder will be erased such that the files cannot be recovered from the hard drive.
Once FileVault is enabled, the files in your Home folder can only be accessed via your login password. If you forget this password, you will not be able to access any of your files.
Since FileVault will first copy your Home directory before deleting it, you will need as much free hard drive space as the size of your Home folder to enable File Vault.
IMPORTANT: Before turning on FileVault, be sure you have a current backup of your Home folder. Once you have enabled File Vault, be sure to make regular backups of your Home folder.
Checking the size of your Home folder
Checking the amount of available space on your hard drive
Turning on FileVault
Once you've enabled FileVault, you may notice something new when you shut down or restart your Macintosh. If you've increased or decreased the size of your Home folder (copied or deleted files), you may receive a warning message when you shut down/log off/restart asking you if you want FileVault to reclaim lost disk space. Click Continue to have FileVault reclaim the disk space. Do not interrupt this process even if it takes a while.