Yes. Also use the previous versions feature at any time to restore a file several versions back. This works even without setting up windows backup, as restore points also create backups of your files. But windows backup will offer even more on days the backup is created. I have mine set like this:
2 internal hard drives, one is main, other is backup. Windows backup runs to it every 2 weeks and does a system image and backs up all my files. An external hard drive works well too, but then is hard to have on a schedule since you need to remember to plug it in.
I still recommend having a backup external hard drive as well, with your users folder dragged onto it just in case.
Just like time machine on apple. Of course microsoft removed this feature in windows 8, because they like to screw up good things.