It's no secret that a large number of Americans struggle with money management. Most live paycheck to paycheck with little to no savings to fall back on, and the average consumer holds $5,551 in credit card debt. All told, an estimated 42 million U.S. adults are struggling with all, or nearly all, aspects of their financial lives, according to a new report by the Center for Financial Services Innovation.

How bad have things gotten? A good 47% of Americans say their spending equals or exceeds their income. Meanwhile, 43% use credit cards to make ends meet, while 36% can't pay all of their bills on time. If you've managed to land in a sorry financial state, it's time to take steps to improve your circumstances before they get worse. Here's how.

Man and woman sitting on couch with papers spread out on table in front of them

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1. Start following a budget

A big reason so many Americans spend their whole paychecks month after month is that they have no idea what they're actually spending money on. To avoid spending down your earnings entirely, get a better handle on your expenses by creating a budget. Go through your bank and credit card statements from the past year, see what your various bills have averaged, and compare your total spending to your total take-home pay. If the numbers don't align right (meaning, you're spending all of your earnings, or are exceeding that level), it's a sign that you'll need to start making lifestyle changes to reduce the amount you spend.

What sort of changes are we talking about? If you're spending more than you're bringing in, you'll have to cut some serious corners. That could mean downsizing to a smaller living space, unloading a vehicle you technically don't need, or avoiding restaurants and pledging to only cook at home. Otherwise, you might get away with smaller changes, like scaling back your cable package or canceling your gym membership. Either way, the key is to understand how much money you have to work with each month, and what expenses you need to cut to ensure that you're paying all of your bills on time and in full going forward.

2. Get out of debt

If you're saddled with credit card debt, you may not realize that for each day you carry a balance, interest will continue to accrue against you. To avoid digging yourself deeper into a hole, assess your various debts, figure out which come with the highest interest rates, and pay those off first. From there, you can work your way down to your less expensive debts -- meaning, those with a lower interest rate.

Of course, you can't just snap your fingers and magically make your debts disappear. Rather, you'll need to drum up cash to pay them off. To that end, cutting expenses in your budget will certainly help, especially if you make substantial changes. In addition, consider getting a second job on top of your primary one. Since the money from that side hustle won't be earmarked for other expenses, you should be able to use it to pay down your debt.

3. Build an emergency fund

Cutting expenses in your budget to better align with your earnings and digging out of debt are critical steps on the road to financial security. But one equally important step involves building yourself an emergency fund -- ideally, one with enough money to cover three to six months' worth of living expenses. This way, the next time an unplanned expense sneaks up on you, you won't be forced to whip out a credit card and charge your way into another painful financial situation.

Remember, even if you adjust your spending so that you're not quite blowing your entire paycheck month after month, you might have a scenario where your car breaks down or your roof springs a leak, and you're on the hook for a $1,000 repair out of the blue. If you only have $200 in your paycheck to work with, you're apt to wind up in debt if you don't have money in the bank. Therefore, in conjunction with paying off debt, take the money you're saving by cutting expenses and working your side hustle, and use it to establish some savings.

If you're among the millions of Americans who are financially vulnerable, it's time to change your habits. By spending more judiciously, eliminating and avoiding debt, and building emergency savings, you'll set yourself up for a much healthier financial life.

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