Just so that you have an additional data point, here’s how I do it.

I run a backup first, using borg-backup. I used rsync in the past, then rsnapshot and now borg since it allows for compressed incremental backups, diffing on the “chunk” level, meaning I won’t backup the entirety of a modified file again and safe a lot of space.

I used yay before, but like you I didn’t want to go into it blindly and do some modicum of sanity-checking the PKGBUILD for changes beforehand. Since it wasn’t obvious on what would be the best way of using yay for doing this, I asked around on the ArchLinux Forum, and ultimately decided to try one of the simpler tools suggested in the Arch Wiki, aurutils.

After setting it up (the author helped me migrate), I now use it as follows:

• aur repo --upgrades: Searches for new versions of aur packages and displays them
• aur sync --upgrades --no-build: Performs a git-pull under ~/.cache/aurutils/sync and opens vifm so that I can look at a diff of the PKGBUILD and all the other changes in the affected directory.
• aur sync --upgrades --no-view: Builds the package. It is now available as part of the custom (local) repository used only for aur packages, but hasn’t been upgraded yet. That is, a package.tar.gz or whatever has been created and put into ~/.cache/aurutils/sync/, where the PKGBUILD resides as well
• sudo pacman -Syu: Upgrades all packages from all repositories, including the ones from the custom repository

I won’t argue pro or against one aur helper or the other, but I feel like I have a little more insight about what happens under the hood since I made the switch. That being said, in the very beginning, I managed aur packages manually. This works also, but at some point became too tedious for my taste. I am happy with the semi-automatic approach I am using now.

So yeah. If I needed a 12 step process to update my system it would still run kernel 4 :D (I’m lying of course) but i really don’t do as much as you and I don’t do more than necessary manually. Basically I run 2 commands to update:

1. update which runs the update process more below.
2. clean which removes orphans and cleans the cache

So update is the alias where the magic happens and it does the following:

1. It runs sudo pacman -Syu checking with the Informant hook if there are any unread news, if so it stops the update. Otherwise it just runs through it.
2. Then it runs pacdiff to check if any config files changed (I ran into an issue with that before where I didn’t check properly and suddenly couldn’t login anymore.
3. Then, if flatpak is installed it will also update all flatpaks.

So my only manual intervention is “accepting” the news if there are any. Accepting the updates. And (of necessary) merging the pacnews. This way I have kept a fresh and stable system for a couple of years now.

TL;DR
I’d advise you to automate backups as incremental daily backups, automate reflector, clearing paccache and rebuilding initramfs/grub config.

1. My system automatically backups at 4 am or boot time anyway, with basically the same command as you (also excluding games, caches 'n stuff).
2. yay -Pw should show you unread news.
3. reflector can be run as a systemd service
4. For me, the journal never grew to a large size, despite not being cleared for any of my systems. Also useful for checking logs on systems where some errors may stay undetected for weeks, like servers (which I do run, successfully, without problems at all, on Arch testing repos. Even arch for arm works without any problems at all).
5. There’s a pacman hook in the AUR that automatically clears the cache to the last three versions, or what you want. My yay cache is ~60 GB tho, which is more than the rest of my system combined. Still not an issue, as it is excluded for backups and I can just clear it or change the limit.
6. As yay basically just invokes pacman -Syu, that step is actually pretty redundant.
7. Errors should be outputted at runtime of pacman/yay, so as long as you don’t have 200 pkgs to update you could monitor normal and AUR packages at once.
8. If packages are removed from dependencies they should be uninstalled automatically I believe and using pacman -Rs should remove packages that were only installed for the package you are removing. (Btw, -n removes config files too, if you don’t want them anymore). Despite that, I do check for orphans etc. when I feel like I want to clean my system(s).
9. Just yay upgrades AUR and pacman pkgs, as said in 6.
10. Just as 8, orphans shouldn’t happen anyway. Though I did not know about the AUR specific command, thank you!
11. As I’m, not even joking, updating and “newest software” addicted, rebooting every time is very annoying, especially for servers. Luckily, as I update extremely often, it’s mostly very few packages so I can quickly decide if to reboot or not. In general, packages like screen or python can be ignored. Packages like sshd can be reloaded by just restarting the service (systemctl restart sshd). Only kernel, CPU-ucodes and drivers are a real update trigger for me.
12. I don’t have flatpaks, and eg. pip is redundant as my python packages are managed by pacman/yay. So it’s just yay to worry about.

Also, you missed a little but important step: Recompiling initramfs and the grub config (If you use grub, that is). If so, there’s also a hook for that.

Of course, just automating everything screams for errors and system crashes - if not checked. I’d also advise you to check systemctl status regularly, as it can inform you of failed (critical) services, like backups, DynDNS or just shadow.service informing you there’s a user missing/extra in /etc/shadow (which is the password file, btw).

In conclusion, many things could be done as service automatically, are redundant or could be done less often. Though I must say, it is better to do everything explicitly and with care, like you do, than to skip over things.

you can automate some parts of that away or can be combined
most AUR helper will basically invoke pacman -Syu internally before actually upgrading any AUR package (as otherwise this can lead to issues)
yay in particular can just be called via yay (no arguments) which is an alias of yay -Syu

Point 3: reflector.timer comes with reflector now and runs weekly by default, you need to configure and enable it though
https://wiki.archlinux.org/title/Reflector#systemd_timer

Point 4: you can restrict the journal size to much smaller than it is by default (10% of the partition size OR maximum 4 GB): https://wiki.archlinux.org/title/Systemd/Journal#Journal_size_limit
or alternativly set MaxRetentionSec to 2419200 seconds (4 weeks)

Point 5: can be done via pacman hook automatically after every upgrade
example: https://aur.archlinux.org/packages/pacman-cleanup-hook

there are also many other useful pacman hooks which tell you if there are any orphans or if AUR packages need to be rebuild or there is a hook which reload kernel modules after a kernel upgrade (which otherwise would warrant a reboot unless you are ready for the issues of many unloaded kernel modules)