There are essentially two different types of backups -- file backups and image backups. Most of the time when you read about backups, people are talking about "file" backups where only a subset of your hard drive is actually backed up. Most of what is on your computer are "program" files (both Windows and appication programs) which you really don't need to back up as you typically have a copy of them in some other form (the CD/DVD that they came on or perhaps in a "restore" partition on your computer). The only "files" that you really need to worry about backing up are files that you yourself create -- via a word processor, or maybe photo files from your camera, or music files that you have downloaded. So the concept of just backing up these files makes some sense -- should be quicker and easier, at least one would think.
But there are a couple of problems with this approach. First off you have to go through some laborious setup procedure telling the backup program exactly what you want to back up and where it is. And thus you run the chance of missing an important set of files. Or even if you get it right when you set up your backup, you might later add an application that stores files somewhere that is not covered with your backup and you can easily forget to go in and update your backup setup with this new info.
The alternative is an "image" backup.
The number one advantage of an "image backup" is that if your hard drive should ever fail, all you have to do is replace the drive, restore the image backup, and voila -- you are right back to where you were, not only with all your files (documents, photos, etc.) restored, but also all your programs (like Office, Quicken, etc.) are also restored exactly like they were. Even your internet bookmarks/favorites are there, your address books are there -- everything is exactly like it was when you last did the image backup.
And here's the really good news -- for home and personal use, there's a free image backup program called Macrium Reflect that makes it extremely easy not only to do an image backup, but also includes a scheduler so that you can tell Reflect to automatically backup your hard drive nightly so that you always have a timely backup. Note that you do need an external USB drive for this to work, as you can't create an image backup on the same drive you are backing up -- but external USB drives are relatively cheap, and when used for a nightly backup of your main hard drive, a very good investment.
Once you have your backup set up and scheduled, you should never have to worry about losing any data ever again!