For a local user I would create a password protected disk image ( *.dmg file) with Disk Utility . Works well. Looks like a file, but is really usable like a removable disk or folder. You can also set permissions for access via the Info box for the folder, though it has limitations as to the amount of access you can deny.
For network sharing security sharing is available under the "Sharing" icon of system preferences.
You do it when you create it. When you select the New Image icon, select encryption and pick the method you want to use. It will prompt you to create a password after you click the "create" button. Make sure you uncheck the "Remember password in my keychain" or else it will not prompt you for the password as long as you are logged in. Others logging in as themselves would still be prompted however. Once it mounts you will not have to enter the password again unless you unmount the dmg.