Sparse bundles , like read/write disk images, can be encrypted Create a sparse bundle through the disk utility The sparse bundle's size on disk corresponds to its content size (which I like, but you may not like that it gives away some information about its insides) The change password function of Disk Utility (Images->Change Password) does not work through the GUI (the sparse bundle is greyed out and can not be selected). Use the command line instead: hdiutil chpass /path/to/Encrypted.sparsebundle/ The sparse bundle is supposed to be easier on Time Machine and other backups, because it is not one monolithic structure. Resizing the sparse bundle needs to also be done through the command line (GUI greyed out) and is done using hdiutil resize -size 1.5g /path/to/bundle Where 1.5g is the new size. It will ask you for the password.