Mac storage basics · Time Machine basics
How big should my Time Machine backup drive be?
Short answer: Roughly twice the data you back up, so it can keep a useful history. A smaller drive still works; Time Machine deletes the oldest backups when it's full.
A common rule of thumb is at least twice the amount of data you're backing up, so Time Machine can keep a useful history of older versions. If you back up 500 GB, a 1–2 TB drive gives room for months of history.
When it fills, Time Machine deletes the oldest backups automatically to make room, so a small drive still works — it just keeps less history.