1. Backup destination- A backup destination needs to be set in place before using Time Machine. Some options for a backup destination are: external hard drive via USB connection, ThunderBolt, FireWire, AirPort Time Capsule, or an OS X server on your network.
2. Beginning with Time Machine- Set up your external drive and if you haven’t already specified, Time Machine will ask if the attached drive should be used for the backup when it runs.
3. Using as backup disk and encryption- Click Use as Backup Disk for the external drive you’ve connected to your Mac. If you want the backup encrypted, check the box next to Encrypt Backup Disk.
4. Ensuring proper formatting- Ensure your backup disk is formatted as Mac OS X Extended or Journaled.
5. AirPort Time Capsule- If this is your chosen drive to do backups on, consult packaging documentation on network use. If everything is good, configure as instructed in documentation. Select AirPort Time Capsule as the backup disk after Time Machine is turned on. Select Encrypt Backups if desired.