Seeking advice on optimal set up going forward - storage-wise and email-wise. Using GZ as my sounding board - as I'm pretty sure I am missing something obvious / have not considered different options.

I have both Google Workspace, and MS365. 
Google Workspace was set up when I got my own domain a few years ago, to use Gmail for our (2x users) custom email addresses. Was not aware of other options at the time.

Few years ago, got MS365 Family to use desktop Word, especially for writing my thesis. 
Now I have finished studying, I am reassessing our subscriptions/set ups going forward.

Whenever needed (rare now) I share documents on either Google Drive, or MS OneDrive. (For reference I have a personal gmail account too, with limited storage available.)

I appreciate having access to the cloud/central storage because I mix my use of/access to documents between a laptop, desktop PC, tablet, and phone. 

Google Workspace
Google Workspace is costing me upwards of NZ$40/month for 2 users (US$24). I think we get 2TB storage each. 

I have over 150gb of photos saved on Google Photos under this profile. (On my free gmail account I also have some photos stored.)

I now realise that this cloud storage is with its risks, so open to considering actual back up options that are offline - a separate matter for now, but would welcome thoughts on that. 

MS365
I have the Family edition, with 1 other user currently on it, so that's 2 of us on there, out of the 6 that could be using it. Am paid up until middle of this year (ish; need to double-check). Paid $109 for a MS365 Personal licence (to downgrade from Family), in November last year - but chose the option to continue with Family for part of 12months to give us time to consider/tidy up docs before moving away from . 

I understand I'd need to subscribe to Microsoft Exchange too, at $6.50/user/month, to use our custom domain email addresses in Outlook? The domain was bought and is admin'ed through 1stdomains. 

Most of my documents on my devices (laptop and PC) - I tend to save to OneDrive, not so much local folders. Since getting MS365 I have reduced my use of Google Drive. 

What I am getting stuck on/analysis paralysis:
1) I don't think I need desktop versions of MS apps anymore - I am more likely than not to get on OK with the web-based apps. There's also Libre if I really need more functionality. 

2) However, I think NZ$40+/m (Google) is on the expensive side...? 

3) Can I use MS Exchange on its own to use Outlook on the web (the free version)? If we ditched Google Workspace, started using MS365 Personal (free), and looked at other storage options (especially better ones, to make reliable back ups of the important documents/photos)? External SSD/HDDs? 

4) Is it easy to migrate photos out of Google Photos?

5) What storage options (that are either backed up automatically, or back up on schedule) are reliable and inexpensive? 

In short, if you were setting up a person with a new computer, how would you set them up, for their storage and (custom domain) email use that is straightforward and inexpensive (compared to how much I currently pay)?