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Linux noob here. Usually in Windows if I have a 1TB SSD, I make a 250GB partition for Windows and all of its things and I use the rest for a second partition where I install my stuff and store my files.
Usually in case Windows decides to go belly up, I still have my files. In more than 20 years it has never happened but I've always done it like that. I mean if Windows goes bad, I can still remove the drive and insert it into a different PC and copy my files away.
Should I shrink Partition 3 and make another one? Or keep it as it is? If I would, I read that I need to boot with a live usb to be able to shrink it. What kind of partition would I make?
This. For home use having a separate / and /home (and maybe a swap) formated as ext4 is solid and allows you to distro hop with ease. As you get more comfortable with Linux, you'll learn about the luxury of LVM volumes and more exotic filesystems with compression and other features. What is important is to always keep fresh backups. BorgBackup is your friend, you can find a few graphical front ends for it to simplify things.