Mac 101: Protect your data with FileVault
To use FileVault, you must first set a Master Password. This password is a fail-safe if you forget your user login info. However, if you lose both your user login info and the master password, you will not be able to decrypt your home folder and your data (if not backed up in unencrypted form) will be lost forever. To set the master password, navigate to System Preferences > Security > FileVault > Set Master Password.
Once you have the master password set, you will be able to turn on FileVault and begin protecting your data. Click the "Turn on FileVault" button in the FileVault section of the Security preference pane. You will be asked for your master password, and a disclaimer will be displayed explaining the process. Please note that you will not be able to login to your Mac via SMB (Windows file sharing) after turning on FileVault.
FileVault provides a high level of data security, but some applications have a history of incompatibility with the feature; it's also very important that you have a secure and solid backup strategy if you choose to use FileVault. For best results with Time Machine, make sure that your FV home folder is upgraded to the Leopard image format (if you were using FV under Tiger, you may have to turn it off and back on to convert your home folder) and log out of your account periodically to allow backups to run.
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