How large External HD for Time Machine?

Hello, everyone! Yes, after decades of being in PC-Hades, I have joined the "Dark Side" as my former PC friends have joked about lately. I have a new iMac, 1TB drive with a 27" window to the world attached and I am in **** with Macs now. What took me so long???
I've had the machine three weeks now and am starting to use it for my personal business and now have a strong need to start using TM for routine backups of invoices, bills and the likes.
I apologize for being so wordy but here is my question, one I have not seen asked here lately or been able to find for myself.
Is it really necessary to purchase a 2 TB drive for TM to use as a backup (as I was advised to do in the Apple Store today)? What I am trying to protect wouldn't fill that much space in a century of use. Is it possible to buy, say, a 1 TB drive and partition a third or a half of it for TM and leave the rest for music or home shot videos so as not to clutter up the new internal HD?
Or should I just go back to my old habits of backing up critical files (maybe 30-50 kb, one page bills/invoices/etc) and just use a small thumb drive instead and do the old drag and drop? I like the idea of 'automatic' backups but I don't quite understand the reasoning for having a backup drive the exact same size as my internal HD.
Any advice would be very welcome.
Thank you very much!
pat

JG!
Whew, am I blushing! I totally missed the FAQ-I just came to the forums and started searching for the answer and just blew by the FAQ. My aplogies. Thanks for directing me that way. I appreciate it.
pat

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