Can I set up FileVault to encrypt only specific folders inside of my Home folder but not the whole Home folder?
I want to do this because it's not very convenient for me to encrypt the entire Home folder because it's too large and there is no place for encrypted data, and it's also not convenient for me to keep all those files out of my Home folder.
Thanks in advance.
EDIT: if it not possible, what are the other usable ways of encryption?
It's not possible (at least not that I know) to specify Filevault's target dir. It will work by automatically working with your home folder by creating (if you are in Leopard or above) a Sparse Bundle (or a Sparse Disk Image if you are in Tiger). The reason for the change has to do with Time Machine (and to allow -to a certain extent- to backup a FileVaulted home).
However, you can pretty much "replicate" the functionality of FileVault for a specific folder(s) by using Disk Utility to create an encrypted sparsebundle image of the Folder in question. You'd have to mount this image every time you want to use it but the "effect" is similar.
You can create symbolic links to the files and add the image to the login items if you have an application that needs the data in its original location (which is pretty common). You will possibly have to add the image password to the "Keychain" for it to be automatically expanded.
It would be important to read about Time Machine's limitations too, since a FileVault home directory can only occur when you're logging in (or out). In order to make Time Machine to act as a regular, you need OS X Server edition as a target.
According to the wikipedia entry (which I should have quoted at the beginning since it has all this information, better written and more complete):
FileVault is limited to encrypting home directories only in versions of Mac OS X prior to 10.7, and only those directories in their entirety. FileVault can encrypt entire disks starting with Mac OS X version 10.7
(emphasis added by me)
It remains to be seen whether this is true or not, since we don't speculate about future versions, but keep that in mind.
As an alternative, there are "multiple" programs that will also help you keep a secure "vault" of things. I'm mentioning Exces because I got it from a Bundle a couple of years ago. I used it three times and it works; there might be free alternatives (as well as using the plain "Disk Utility").
Update: Added the link provided by Kyle, because it explains how to do it, but kept my answer because it's "longer" :)
When I need partial encryption and especially when the encrypted container needs to be portable, I turn my head to TrueCrypt, which is free & open source software, available for the major operating systems, and can
On top of this all, it is rather fast and has many encryption options.
Containers are encrypted files that hold a file system. Being a file, it can easily be moved, copied, briefed, re-briefed, indexed or numbered (or whatever it is what you do with your files). They're useful to be used with e.g. removable disks, when you need the files and encryption be used under different operating systems.
Though, if you need to use the files only on (your) Mac, I would go for the most native way possible, as it is described in Kyle's and Martín's answers.
For specific folder encryption have a look at Espionage:
As far as I know, it's not possible.
Due to the way Filevault operates, it's not possible to selectively protect files. However, you can create an encrypted disk image that you can store within your home folder that you can use to securely store files that you want to protect.
