Yes time machine needs to be set up. You can control how often it backs up your data. I recommend using a hard drive as well. You can partition a hard drive so that one part is just dedicated to the time machine back up.

https://support.apple.com/guide/mac-help/back-up-files-mh35860/15.0/mac/15.0

Yea, I think the VM is a good first step. I know its a lot to go out and buy a whole new computer for something you're not even sure how to use yet. I think with familiarity it will hopefully make things easier!