Relax its easy.
The thumb drive isn’t file backup but an operating system (OS) startup
Do you have a backup / Time Machine ? Always advisable but not strictly necessary. As a min get key data/personal files onto say google drive and photos on a cloud service like flickr or piscasa (if you wish)
Upgrade methods depend on your preference
A usb thumb drive startup works well. Basically you can takeout your old drive and put in a blank new drive. Boot from usb and then decide what next …
Either fresh osx install from web
Or complete copy of old disk via time machine backup (if you have one)
Note I would recommend spending £20 on a usb caddy as you can put the old disk in it to get files off and the reformat the old disk to use as storage
Also with the usb caddy you could do a complete clone from old fo new disk and that way you have a coly of everything inc passwords … this is very similar to time machine restore if for example you don’t have a time machine backup
FYI I have done 5 disk replacements now. Email in profile and we can have a call if you want
RAM is easy and I would suggest you do this first to check it works
Hardest part imo is undoing the damn screws on the back of the laptop. You need small phillips and a torx 10 (? I think)