In order to define working backup and restore strategy you need to identify the risks you are facing and the impact that the bad event could have on your digital life.
The bad news first. As we are using our computers more and more in our lives, we are becoming more and more dependant on them and the data stored inside computer memory. What that means? It means that computer systems are becoming more easy to use, but the price is that the same systems become more complex. The more complex is one system the more risks are threatening its functionality.
The good news is that if you are proactive and prepared for those risks, there is nothing to be afraid. Also if you are prepared and something bad happen you are going to receive big pay-off (especially if you are running business). How? You may ask. For example in case of natural disaster your computer system most likely will be destroyed, but at the same time others' systems will be destroyed. If your restore your system first you going to win over your competition. But what is the pay-off if you do not have business? In that case you are going to be able to concentrate to more important task of rebuilding your life and restored data from your system can help.
The sad fact is that today many people do not realize how dependent they are on the computer systems. As System Administrator I can testify how unprepared many companies are. In case of disaster affecting the company's IT infrastructure most of them will be out of business. This is true even if the same companies are able to restore their systems, but not quickly enough.
As you identify the risks affecting your computer system please write them down. Why? Usually defining backup and restore strategy is process that is taking some time. In case of home user it is taking long time. During that time you will find yourself coming back to your notes time after time. But more important is that you need to do new risk assessment every time your make change to your system and the notes are 'life saver'.
Now it is time to identify all the risks. You can start by identifying the sub-system on which your computer system depends. There are many sub-systems, but the most important and the most often ignored is the electrical power. As thing stands today if you do not have electricity your computer system is dead. But before you run to buy UPS or/and generator, you need to answer the question: "What will my life look like without my computer system?"