Setting Up And Using Time MachineTo use Time Machine with an external drive, just plug in a "new" external USB, FireWire, or ThunderBolt hard drive to your MacBook. Time Machine will drive will then ask you if you would like to use this drive for backing up. You then click "Use as Backup Disk" and select this external hard drive as your backup destination. You can choose to encrypt your backups with a password if you don't want others to be able to see your data without knowing your password.
In order to use an external hard drive for Time Machine, it needs to be formatted as Mac OS X Extended (Journaled). If your hard drive is formatted NTFS or FAT, Time Machine will ask you if you want to format the drive, and then of course wipe all data from the external at that time. Make sure there is nothing important on your external drive if you choose to format it. All data will be erased.
Time Machine normally starts backing up your data automatically once your chosen external hard drive is plugged in. You can also start Time Machine manually by choosing the option to "Back up Now" from the Time Machine menu in the menu bar. If you press the option key while clicking on the Time Machine icon you will be able to see additional choices such as verify your backup disk, or switch to a different backup disk.
Your first Time Machine backup may take a little while. It depends on how many files you have that need backed up. The good news is you can use your MacBook while Time Machine is backing up your files. When done, Time Machine will display a message. If there is any problem, it will also give you an error message.
Once Time Machine completes your first backup, it will only back up files that have changed on your MacBook since your last backup. This procedure of additional backups happen when you plug in your external chosen backup drive. Your MacBook also performs these backups as a feature of the Power Nap.
You can see the Time Machine menu showing you that a backup is happening in the background when a backup is being performed by showing an additional arrow.