Anyone who’s ever been on the receiving end of a pink slip knows that leaving your job and losing your job are two very different experiences. Jean Chatzky, financial journalist, author, and money coach, has built her career on “making money make sense.” Here are Jean’s top insights about what to do immediately after losing your job:

Be Prepared.

Hopefully you’ve already stashed away emergency funds that will cover your expenses for 6-9 months, or have a home equity line of credit in your back pocket. The time to save for unemployment is before you become unemployed, so if you’re lucky enough to still be on payroll, start saving now so that you’re ready if the worst ever comes. Take a good hard look at your budget and understand which are fixed costs and which are variable. Know how much you can realistically cut your expenses if you had to. And don’t forget about healthcare. As Jean says, “Look at your benefits. What will it cost to maintain them going forward? COBRA is one way, but it can be so expensive, especially in New York City.” Have a grasp on your expenses and put a plan together to cover those expenses before you’re let go.

Cut Back.

The one upside to getting laid off is the severance package which will ease your transition while you get back on your feet. Your goal should be to stretch that severance as long as possible. How? By reducing your monthly bills right away. Make a detailed list of your current expenses and go through it line by line. You can often find savings in more places than you might expect. Can you cut your insurance premiums? Ask your insurance agent if you can save by enrolling your both auto and homeowners insurance, or if you can safely adjust your coverage to lower your monthly bill. Car insurance often includes extras you don’t need, like rental car coverage. Jean explains that there are lots of ways to save. “Cable? Time to slash it. Groceries? Coupon with a vengeance. Debts that can be recast? Refinance.” Do what you have to do to get your expenses as low as possible, as soon as possible.

Need Cash? Be Smart.

After being let go suddenly, many people panic and think they need to sell their house right away. If you need liquidity now, there may be better first steps. First, go for your savings. If you don’t have enough cash socked away, look for other assets. Do you have stocks or bonds that are languishing? A car you don’t need? Thousands of credit card reward points? How about stuff around the house? You can probably pay for a month’s worth of groceries by selling your old DVDs, books, and video games on Amazon.com or Ebay. Selling your house may be necessary, but in the current market, it’s unlikely that it will sell very quickly, so if you’re strapped for cash, look for other options first. And Jean advises that you reach for the money in your retirement account only as a last resort. “If you aren’t 59 and a half, you’ll pay 30% income tax plus a 10% penalty. That means you’re losing 40 cents on every dollar!”

Avoid the Mistakes.

It’s always good to be optimistic, but make sure to temper your rosy outlook with a dose of realism. Continuing to live as if you are going to get another job quickly is great way to land yourself in the gutter. It’s a tough economy and a competitive job market out there, no matter what skills and credentials you may hold. With any luck you’ll be back in the office within a few months, but you can’t count on it. If you’re going from two salaries to one, or one salary to none, you have to react quickly. Adjust your lifestyle the very same day and don’t squander your resources – you may need to really make them last. And learn from your mistakes! If you weren’t prepared this time, make it a top priority to be prepared in case it happens again. As soon as you’ve landed a new job, start saving, keep your expenses to a minimum, and put a plan in place for next time.

Losing a job is not the end of the world. Be prepared, cut back, be smart, and avoid the common mistakes, and you’ll be back on your feet in no time.