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Backing up one's data is as essential in computing as drinking water is essential for living. It is not a question of if you will lose data, but when. While viruses and spyware are not as common on the Mac platform reasons for backing up are no less important on Macs than on Windows. You might mislocate a file, you might misname a file, you might accidently delete a file, you might find that an application is not compatible with an update, you might find that your update was not applied correctly, or you might find that you forgot some critical information about a registration code. As long as we are human, backing up is imperative for everyone who uses computers.
Those that don't back up are forced to spend thousands of dollars on data recovery, and the chances of recovery are not 100% even if one does spend that much.
The cheapest method of backing up is simply to printout information you have written down for textual data. The next cheapest to burn to CD. Followed by DVD, hard drives, flash drives, and SSDs. Note the economics here are based on initial purchase cost. Long term cost may vary depending on the amount of data, and the format of data being stored. Some methods such as writing down music are certainly not as cheap as just recording music, since recorded music can be converted back to written music with certain software. Video and photography of course is more suited to the more expensive mediums, as much of the metadata can be lost when compressing the various formats, and the quality of what's seen is also lost. The point is, backing up should be done in the format that requires the least rework for the author of the data.
Data recovery software titles for Mac OS X include Prosoft Data Rescue, Subrosasoft Filesalvage, and Boomerang's Boomerang. Additional ones are on this user tip. But none is as reliable as simply recovering an existing backup. And Drivesavers is an expensive but very reputable company for data recovery.
Backups should both be off site, and off computer. Thieves can steal data if they are in the same location. Fires can damage hard drives. If a power surge should come into the computer and fry the hard drive's controller, another drive on an existing computer will basically be rendered useless.
Backing up should be the only maintenance you do, and primarily when the computer is not in use for anything else. Though intermediary backups may be useful for individual files if working on a deadline, but needing to make sure you don't lose time doing the work you do.
Archival backups can be especially useful on a project basis, to keep track of changes you make, and recovering the status of your data at a time during its production.
Both Time Machine, available in 10.5 and higher, and "Versions" available in Mac OS X 10.7 and higher and applications supporting those tools offer forms of Archival backup. As such, if you use these tools, make sure your backup destination has at least twice the capacity as your original.
Clone backups are useful if you don't need to keep track of multiple revisions, but only need to make sure the contents on your hard drive
are always restorable at the state they currently are. And they only need a destination the same size as the original. You can make an exact duplicate of your machine's software with cloning software such as Shirt Pocket Superduper, or Bombich Carbon Copy Cloner in Mac OS X, and you can do the same with Norton Ghost in Windows. Clones can save you from having to retype registration codes upon data recovery most of the time, but not always.
Even if you only backup your user data, you will be much better off than no backup at all.
So backup now, or forever hold your peace. You'll be glad that you did. If you need help understanding how to use backup software to save a particular kind of data, or prepare for a possible downgrade if an upgrade fails, please ask first, and someone in the forums can help you.