Correct. The drive needs to be formatted as ext4 and mounted afterwards via fstab.
After rebooting, make sure to check if the new drive is mounted correctly. You could then create a folder on the new drive to your liking, e.g. as home-backup.
In one of my first posts on this board, I showed a script for backing up folders in side of my home:
May be this helps a bit. Take note of the tar command, as it preserves all rights of the original files.
You might also prefer to use a dot-file handler utility for the backup / restore job.