(MONEY Magazine) – It's an ordinary Saturday afternoon: You're in the bedroom sending e-mails from your laptop when your wife, who's in the kitchen, picks up her Pocket PC and swoops into your hard drive to copy the grocery list she saved there. Meanwhile, outside on the deck, your youngest child and a friend--both on their own laptops--are battling evil forces together in the hot interactive Web game Jedi Knight II. And in the basement, your eldest is downloading MP3s--legally--off the Web to the PC so he can beam them to the wireless digital receiver to listen to later. Welcome to the world of the wireless Web. Interested?

Setting up a Wi-Fi network (that's short for wireless fidelity) still isn't seamless, but it's getting easier. In fact, even coffeehouses and burger joints are doing it, as public wireless Web locales, dubbed "hot spots," pop up across the country. For free or for a tiny fee, you can log on at McDonald's, Starbucks and even some airports. If franchisees can set up wireless networks in their shops, you can certainly do so at home. We'll tell you what you need to buy, how to set it up and how to keep your Wi-Fi network secure. Of course, you can always hire someone to do it for you, but the labor alone will cost you $30 to $250 or more, depending on where you live and how complicated your setup is. Then there's the cost of Wi-Fi equipment. Read on to find out what you need to know to do it yourself.

WHAT YOU'LL NEED

THE LATEST OPERATING SYSTEM Wireless networks work best with the newer operating systems: Windows XP or Apple's OS X. If your system is more than three years old, like Windows 98 or Apple's OS 9, consider upgrading; you can set up a wireless network with these systems, but it won't be easy.

A WIRELESS TRANSMITTER This is the heart of your wireless network. It's a small base station that connects to the Internet via a cable or DSL modem (networking doesn't make sense unless you have high-speed Internet service). It sends radio signals to the devices on the network, much the way a cordless phone base communicates with the handset. A wireless transmitter will cost about $150 to $200.

There are two kinds of wireless transmitters: routers and access points. If you are building a network from scratch, you'll need a router. If you already have a wired home network but want the convenience of staying connected to the Web while you walk around the house, buy a wireless access point. It plugs into your existing hardwired router and costs about $120 to $150.

THE RIGHT STANDARD The equipment you need to set up your wireless network comes in several different standards. Stick with the latest one, 802.11g, and forget the rest. It's five times faster than the previous version, 802.11b, which basically means that you can network twice as many devices--computers, printers and digital equipment like audio receivers and T/Vo, the digital video recorder. Plus, you'll soon be able to download and zap streaming videos (even full movies) to other computers and digital electronics.

PC owners should try the Belkin 802.11g Wireless Router ($150). Mac users: Run, don't walk, to buy the Apple Airport Extreme Base Station ($200). And hardwired networked homeowners looking for an access point can try Netgear's WG602 ($120). We tested all three and they were fairly easy to set up. Better yet, they delivered what we wanted most: a wireless Internet connection almost anywhere in the house.

A WIRELESS PC CARD OR ADAPTER FOR EACH COMPUTER You'll need one of these to pick up a signal from the hub transmitter. If you bought a laptop in the past year, it probably has a built-in wireless card. If your laptop is more than a year old, you may need a Wi-Fi PC card--they look like those old 56K modem cards. (Try the Belkin 54g Wireless Notebook Network Card, $100.)

A desktop computer will need a Wi-Fi adapter (such as the Buffalo Technology Wireless USB adapter, $60), unless it happens to sit near the wireless router--and often that's the case. If so, skip the adapter and simply connect the PC to the transmitter with an Ethernet cable.

SETTING UP THE NETWORK

FIND A CENTRAL LOCATION The signal for an 802.11g wireless device radiates in a circle about 150 feet wide, but the closer you sit to the hub, the better the connection. So set up the hub in a central location. If you don't already have a high-speed Web connection, have your modem installed at the location where you want to put your Wi-Fi router. If you already have a modem in your house but it isn't in a central location, leave it where it is and run an Ethernet cable to the desired location. Wherever the hub goes, it should sit at least six feet off the floor to send the best signal. (If you still find a few weak spots in your home, see the box for tips on boosting your signal.)

ORGANIZE YOUR NETWORK In an ideal Wi-Fi world, you'd plug your Internet connection into the base station, install the PC card into your laptop, turn everything on and be connected to the Web.

In reality, you may need to do a couple of things beforehand to truly get unwired. First, disable your personal firewall if you have one (like Norton Internet Security). That will allow your router and all the devices connected to the network to automatically recognize each other. (Otherwise, you'll have to manually network each device--a total chore.)

Next, set up a network log-on name and password. (You'll need to enter them every time you log on.) To do it, you'll need to open a Web browser--Internet Explorer or Netscape--and enter your router's IP address (it's listed in the router manual) in the browser's address bar. Click Return and you'll be able to access the router's settings.

Once you're there, it's easy to figure out how to set up your network name and password as well as to choose certain security options. You can opt to hide the name of your network, for instance. This way, your neighbor or any passer-by may be able to detect your wireless system, but he won't be able to get into your home network.

Finally, give each device connected to the network a name. Pick easy-to-remember names, like "kid's work space" or "mom's desk" for the computers. To name digital equipment that doesn't have a keyboard or other input device like a remote control, such as a digital audio receiver or TiVo, you will have to visit the manufacturer's Web site. TiVo subscribers, for instance, should go to www.tivo.com to enter a name.

ACTIVATE THE SECURITY SOFTWARE You're paying bills on your PC, and a "war driver"--hacker slang for an outsider who drives by with a wireless-ready laptop hoping to snag a free connection--gets access to your account. While this scenario isn't likely, there are things you can do to keep undesirables out.

Many routers come with pre-installed firewalls that are activated as soon as you plug them in. Even so, it's worthwhile to encrypt your network. Most routers offer 128-bit encryption--the highest-security code currently available. It renders your signal and data indecipherable, and hackers find it too much of a chore to crack. Just be sure to activate the encryption on each device that's connected to the network. To do this, go to the control panel and click on Network, and a window will pop up that allows you to activate this stepped-up protection.