My question for you will be:
Will you use the external monitor as "second" screen, OR, you plan to use it at "clam shell mode"?
Bluetooth Keyboard/Mouse are quite common (you won't loose any USB port) vs USB transmitter KB/mouse (wireless) will take 1 USB port, as well wired KB/Mouse.
Option 1: Some of the displays (like Studio Display) - using TB connection, with BONUS of charging the MBA at the same time. Benefit, you can use it as 2 screens and ClamShell mode seamlessly.
Option 2: Monitor with Display port/HDMI ...etc. even old Thunderbolt Display: You will need to designate a USB/TB port for these type of monitors. You do not need to plug the power cord if you use it as 2 screen solution BUT in ClamShell mode, you have to plug the power cord (that can be a handicapped issue for MBA/MBP M1, because M1 MBA or M1 MBP "touch bar" - only equipped with 2 USB/TB ports). If you are using M1 MBA/MBP - with ClamShell: Bluetooth KB/Mouse will be the only solution.
Option 3: docking station - there are many in the market (USB hub and Thunderbolt hub). For me, I would highly recommend Thunderbolt Hub for it's diverse port with power delivery to the laptop. Therefore, you can place the hub between the MBA and monitor, and with many ports available, especially you want to connect few external drives, card reader, even wired KB/Mouse. Some of the hub also equipped with HDMI or display port...etc. - that will give you more flexibility in selecting monitor (even multiple monitors if your MBA can support that)
Best