Exactly, anyone who works on computer should come up with his own good backup plan. As far as backup software is concerned if your budget is low you can get decent free solutions. But if you donīt like fiddling with too much software and combining it, buy some complete backup/imaging solution, itīs worth it.
In my opinion one of the essential things is to install the system on its own partition or better separate HDD and save all your data to the second HDD/partition. This means that your data will be independent of the system. You can even relocate "my documents" directory to another partition. If anything happens with the system you can restore or reinstall it and your data remain itact.
As far as backup hardware is concerned at least one external HDD for mirroring your data on regular basis is must.