Or you can do what I've done:
I run two libraries. I pay for 200GB of iCloud, and have a "main" library holding all my recent photos, that is synced with iCloud and resides on my system drive. All these photos are available on all my devices. Currently I have 1 1/2 years of photographs there, taking up less than half of my iCloud space. (This dual library strategy is equally valid if you don't use iCloud but just want a smaller local library stored on your mac)
I also have an archive library which holds everything older. It is on a separate drive (correctly formatted and prepared - see link below). I use powerphotos to periodically copy photos from my main library to my archive library.
I am very very rigorous about backups. Both libraries are backed up to time machine. In addition both libraries are regularly copied to a second external drive. Finally I periodically export all original images (so that I have the actual image files separately from the photos library) and copy those to a network drive backup. I have a copy of these stored away from home also (mitigate risk of fire/theft).