Is there an easy way to password-protect a folder that holds Microsoft Word or Excel files? I know I can password-protect a file, but it would be easier and less involved to protect a folder rather than protecting many separate files.
James McCormick

You can password-protect any folder by turning it into an encrypted disk image. This is how you do it: create a folder full of documents and launch Disk Utility (/Applications/Utilities). Choose File > New > New Disk Image From Folder. In the Select Folder To Image window that appears, navigate to the folder you’ve created. Select it and click the Image button. In the resulting window, select Read/Write from the Image Format pop-up menu and choose 128-bit AES Encryption (Recommended) from the Encryption pop-up menu. (If you’re especially concerned about security, you can choose 256-bit AES Encryption, which is more secure but takes longer to encrypt.) If you’re concerned about the amount of space the image might consume, you can choose Compressed from the Image Format pop-up menu, though the image will take a little longer to create.

Click Save, and Disk Utility will prompt you to enter and verify a password. You’ll also see the Remember Password In My Keychain option. Disable this option if it’s active. If you don’t and someone sits down at your computer when it’s logged in to your account, they can open the image simply by double-clicking on it.

Click OK and Disk Utility will create the encrypted image. You now have both the encrypted image and the original, unprotected folder. Keeping that folder at hand isn’t such a great idea, as it’s accessible to anyone who uses your Mac when it’s logged into your account, so trash the folder or archive it somewhere safe.

To access the contents of the encrypted image, double-click it, enter the password you assigned, and wait while the image mounts. When you’ve finished with it, drag the mounted image (not the encrypted disk image) to the Trash.

That’s fine if you don’t intend to add a lot more files to this folder, as it won’t be able to grow to accommodate those new files. If you need an encrypted container that can accommodate more files, consider creating an encrypted sparse image. Sparse images are images of a user-determined size that consume only as much storage as is used by the content in the image. So, for example, you can create a sparse image that will hold up to 5GB of data. If you put only 1GB of data in it and then check its file size, you will see that it’s approximately 1GB in size. But you have the option to add another 4GB of data to it. You create such an encrypted image this way:

Return to Disk Utility and choose File > New > Blank Disk Image. In the New Blank Image window that appears, choose Sparse Disk Image from the Image Format pop-up menu. From the Size pop-up menu, pick a size that appeals to you or choose Custom and, in the sheet that appears, enter the size you like. From the Encryption pop-up menu, choose 128-bit AES Encryption (or the sterner but slower 256-bit AES Encryption). Name the image and click Create. As before, you’re prompted for a password. Also as before, you should uncheck the Remember Password In My Keychain option. Click OK, and both the sparse image file and mounted image are created.

Drag the content that you want to protect into the mounted image. When you’re done with it, drag the mounted image to the trash. When you next need it, double-click on the sparse image file and enter its password when prompted.