Start with the mutt wiki article about foreign character sets, which is the most complete source of information on this topic that I know of (see sec. 5). It tells you how to set your $LOCALE variables in your bash shell configuration. That is, if you modify .bashrc and re-log in, you will have informed your system that on the console you like to work in a particular character set. More complex character sets (Russian, Polish) may additionally require ensuring the terminal or console has the font necessary to print those characters. Another good site of information on how to use Mutt in UTF-8 mode is available at Rano.org (see sec. 5).
You should, at the minimum, let mutt know what character set you write in. Consider this step optional if you are a native English speaker/writer, but if you write in any other language this step becomes more important. Add a line like the following to your .muttrc to let mutt know the order in which it should search for a character set with all the requested characters in it. It's an ordered list of character sets separated by colons.
set send_charset="iso-8859-1:utf-8"