What most people do not know about Windows is that it provides an easy tool to keep a backup of all your data in a single file in a single location. The Backup and Restore feature of Windows allows you to create a single file (.bkf) that includes all of your files and folders.
To use the backup and restore feature all you need to do is run it! It does not require you to save the backup on separate media like many of the other backup applications you can use. You can save the backup file directly to your hard drive if you wish, but I would not recommend you keep it there long. The whole point of the backup file is to have it if the hard drive crashes, and if it crashes then you won't be able to get to that backup file if it was only stored on your hard drive. I would suggest investing in an external hard drive that you can buy at pretty much any tech department in any department store.
The backup and restore feature is fairly dynamic. It will allow you to create incremental, differential, or full backups. To use the incremental and differential you MUST first do a full backup (called normal in the backup and restore wizard). After you have your full backup then you can set your scheduled backups to backup incrementally or differentially. Incremental means that if you take your full backup on Sunday then starting Monday your backup will include only the files that were saved or changed on Monday. Then on Tuesday your backups will include everything from Monday as well as Tuesdays new and saved documents and so on throughout the week. Differential backups will only backup the files that were changed on that day. Both incremental and differential have their plus and minuses so play around with it and find the best way for you. I would recommend incremental though.
The way you get to the Backup and Restore feature click on Start->programs->accessories->system tools->backup. When you get to the point where it wants to start the backup there will be an advanced button. You will need to hit advanced if you want to set the parameters on whether to do a full(normal), incremental, or differential backup.
To restore your files you will need to get the Backup and Restore feature again by following the above path. Instead of allowing the wizard to do a backup you would select the restore option. Check the folder you want to restore and allow the restore wizard to do the rest.