Losing your job can be one of life’s most traumatic events. Gone are your income, employee benefits and perhaps even your sense of identity. A layoff can also wreak havoc with financial plans for a new home, saving for college and your own retirement. If you can’t keep up with the bills, you may damage your credit score, and in extreme circumstances might even have to declare bankruptcy. And when you finally land a new job, you may find it comes with a lower salary and less generous benefits than you had before.

Depending on your individual situation, finding new employment could be especially tough. You might be competing against younger workers who don’t have as much experience but are willing to accept a lower salary. You may need to learn new skills. If you have worked at the same company for many years, you may not have an extensive network of outside contacts that can help you find a new job.

The bottom line: It could take many months to find work—and the longer it takes, the greater the hit to your finances.

But as you hunt for work, there are ways you can help limit the financial damage and stay on track for long-term goals. Consider these strategies:

Cut costs. If you lose your job, move quickly to get a handle on your expenses. Grab your checkbook and recent credit card statements. Figure out how much you spend every month on essentials like food, utilities and housing, and how much on discretionary expenses such as entertainment, outside meals and gifts. Make the hard decisions about which expenses you can reduce or eliminate. You might, for instance, get a more limited cell phone plan and cancel the cable TV or opt for a more basic plan.

Manage your severance. If your employer gives you a severance package, that can be an important financial bridge. Your financial professional can walk you through some of the choices for using this money, such as paying down debt or putting it in a higher-yielding savings account.

Reduce debt. If you suspect you might be laid off in the months ahead, look into refinancing your mortgage to get a better interest rate. It’s easier to do this while you are still working. Similarly, while you are still employed, consider setting up a home equity line of credit, which could provide a source of emergency money.

Also aim to pay off any credit card balances. If you later find you need the money, you can always draw on your cards’ credit lines again. And strive to pay back any 401(k) loans. If you leave your employer without doing so, the sums involved will be considered a distribution and could be subject to taxes and significant penalties.

If your finances are really tight, think twice before paying down other debts, such as auto or student loans. It may be smarter to stick with the minimum debt payments and conserve your cash for other expenses.

Apply for unemployment benefits. You may be reluctant to apply, particularly if you see them as a “handout.” But remember: Your employer pays a tax to the state unemployment fund for just this purpose. The size of your benefit will depend on the state where you live and your salary. If you get a severance payment equal to, say, two months’ salary, your benefits won’t start until the end of that period, but you can apply as soon as you leave your job.

Check health insurance options. You may be able to continue your employer’s health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA. If you are eligible, your employer should give you a COBRA notice, giving you 60 days to decide whether you want the coverage. This insurance isn’t cheap: The cost is generally 102% of the premium that your employer pays. You can keep the coverage for up to 18 months for you and your family, including coverage for pre-existing conditions.

You also might be able to buy health insurance on your own or through a trade association. Your eligibility for coverage and premiums may depend on your health and that of your family.

Roll over your 401(k). Consider moving money from your old employer’s retirement plan into a rollover individual retirement account, preferably using a trustee-to-trustee transfer. Even with the money in an IRA, any withdrawals before age 59½ will likely trigger a tax penalty, as well as income taxes. If you really need to dip into your IRA, considering waiting for a new tax year. At that point, you will likely still owe a tax penalty—but you may have little taxable income, and thus the income tax bill may be modest.

You might speak to a financial professional who can help you manage your portfolio during this uncertain time, including suggesting ways to tap your account for living expenses while you look for a new job. You might also discuss the implications and possible penalties of withdrawing money from your retirement accounts or selling investments. Then, keep the conversation going as your situation improves to make sure your financial plans make sense for every stage of your life.