Well, first, you should reformat to APFS. If you don't want to, you can use Mac OS Extended, but you should use APFS.
Then, use "Backup - all files" with "Smart Update", which should allow you to copy everything but the OS.
I would generally just get this SSD, which works well:
https://amzn.to/3u4pTVh -- it's 1TB for about $120.