Unfortunately, your Mac has a woefully small startup drive. Heck, even smart phones offer greater storage than 120 GB these days. There is going to be little to do to keep it from filling. Resetting the Mac will not fix the inadequate hardware. I think you're going to have to take advantage of external storage when you can. The only other option I see is to sell this laptop and buy one with greater capacity.
“System Data” (or “Other”) storage is an amalgam of files that don’t easily fall into the defined categories of “Audio" “Movies” “Photos” “Apps” and “Backups”.
You can’t directly manage the contents of this category. That is done by macOS. The category varies in size depending on the current state of your Mac.
What you can do…
• Empty the Trash in the Dock.
• Empty the trash in the Photos app.
• Delete unused and unneeded application installers from your downloads folder and desktop.
• Reboot your Mac at least weekly.
• Transfer files that you don’t use daily to an external drive and then delete them from the startup drive and empty the trash. Files that take up the most room are movies, images and music.
• Force Time Machine to delete local snapshots:
About Time Machine local snapshots - Apple Support
• Use Disk Utility to delete APFS snapshots:
View APFS snapshots in Disk Utility on Mac - Apple Support
This from Apple on the subject of storage management
Free up storage space on Mac - Apple Support
