Hi Scyrge,
Up to you. Many people like to keep their o/s partition small (ish) and keep their data on separate partition(s).
This makes it easier when you come to reinstall, and less work in terms of maintenance, like defragging, making partition image, etc.
However, if you already have a lot of your own stuff on your o/s partition , you may , or may not, want to make a separate data partition , then copy all your own stuff onto that.
To use the Paragon to shrink your partition:
Rt click the partition to shrink, select Move/Resize:
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Drag from the right to desired size, Click Yes.
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It will then show your new intended partition arrangement along the bottom.
If you are happy with that, Click Apply on the Menu bar at the top of the main window.