Encryption is a great way to protect outsiders from hijacking your i.d. It basically prevents data from traveling from computer to router and vice verse unencrypted. Which is the wireless range i was referring to. It scrambles your info. to the host. "Gotta love it". But "WEP" is a big sign of trouble. Make sure your wireless network is secured with at least "WPA" Or "WPA2". Again big precaution for protecting that I.D. and preventing theft. Not to confuse you with all the mumbo jumbo of why "WPA2" is Superior by far to "WEP". Just make sure your not on "WEP".
My Next suggestion is hide your (SSID), "Service Set Identifier". By doing this your neighbor's wont be able to see your network I.D. by doing a network search. Along with hiding the SSID make it difficult for someone to guess. Simple things that make a big difference.
In the event your encryption has been compromised , theres one other precaution you can make with your router. Set it to only accept "MAC" addresses you want associated with YOUR network. This helps keep intruders you don't want on your network because, the MAC address of the NIC does not match.

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