Select Options… in System Preferences » Time Machine and specify which directories you don't want backed up.
Once you select
/System there, Time Machine offers to exclude all system folders.
To be sure, you can exclude them explicitly (especially if you use a UNIX package manager such as Homebrew, Fink or Macports that uses
/opt which doesn't exist by default): The system also has certain folders that are hidden by default (such as
/bin). You can click the + button in that dialog and them press
Cmd-Shift-. (or check Show invisible items in the file dialog) to display hidden files and folders to select them for exclusion from backup. Do this for all folders directly in your disk's root folder except
Then exclude all users (
/Users/Wife etc.) except yourself.
Once this is done and you backed up your data once, open the backup volume and navigate to
Backups.backupdb/MachineName/Date and check to see if everything was excluded as you wanted.
Regarding your applications, it depends where they're installed. If you install to
/Applications, you should not exclude that from backup. If you install to
~/Applications (in your home directory), you can proceed as described above.
You can also move most third party applications (those not installed using an installer) to
~/Applications to have them automatically be included in the home directory backup.
Remember that the system itself is quite small, with by far the most data being in users' home directories and the applications folders; these also being the folders most frequently changed. Useless (for backups) stuff like your hibernation memory image and temporary directories is excluded from Time Machine anyway.
Backing up those folders is really not a problem, storage-wise. Keeping your exclusions list up to date is.
You might want to take a look at Carbon Copy Cloner or SuperDuper!, which are more configurable. Time Machine is really intended as a complete system backup.