(NerdWallet) – When you’re laid off, you’re not going to be in the clearest state of mind to take care of your financial life.

It can be challenging to do much of anything at first, says Pamela Capalad, a New York-based certified financial planner. “But you have to deal with the financial stuff.”

To safeguard your finances, consider the following first steps.

Secure your human resources contact

“Before you walk out the door — and companies may say you’re out the door within five minutes — make sure you have a contact,” says Andrea Kay, Cincinnati-based author of “Work’s a Bitch and Then You Make It Work,” and several other career books.

Having a person to connect with at your former employer, like an HR pro, will be crucial if you need help rolling over your 401(k) retirement plan, or if there are any issues with delivery of your severance pay.

Find out if there will be severance

Your employer may or may not offer severance. Depending on the company and your state’s laws, this could include severance pay as well as any remaining paid time off you were entitled to. Like other forms of income, severance pay is subject to income tax.

When the online payment company Stripe laid off about 14% of its staff on Nov. 3, it offered 14 weeks of severance, plus more for those with longer tenure. The severance package also included the 2022 annual bonus and pay for all unused paid time off.

Severance might even be negotiable, experts say. Consider requesting additional severance, career services to help you find your next job, reimbursement for unused paid time off, an extension of health insurance coverage or immediate vesting for unvested stock options.

Why would an employer agree? Well, severance is often provided because an employer wants employees to sign a release of claims against an employer, a nondisclosure agreement or a noncompete agreement.

“They need you to sign something, and so you have a little bit of leverage there to negotiate,” says Capalad, who’s also the founder of the financial planning business Brunch & Budget.

Scale back spending

Experts also suggest immediately cutting back on discretionary spending. Focusing on the essentials — food, housing and utilities — until you land your next gig can help reduce the financial strain. Perhaps you can cut back on subscription services, eating out and other extras.

If money is still tight after those cutbacks, consider negotiating your bills with service providers and lenders. A phone call to 211 (or a visit to 211.org) may connect you with social service programs that can help you stay afloat.

File for unemployment

Unemployment insurance offers weekly benefits to workers who are laid off. If you are laid off, file unemployment insurance as soon as possible since it can take weeks to receive your first check.

To qualify, you must meet work and wage requirements, which is time worked and the amount you earned. It’s possible to receive unemployment benefits if you also receive severance, but the rules will vary by state.

To access unemployment benefits, you should file a claim with the state where you worked, according to the U.S. Department of Labor. The state unemployment insurance agency where you live can provide information on filing your claim in another state. Find your state’s unemployment benefits at the CareerOneStop website, which is sponsored by the Department of Labor.

Extend or find new insurance

Find out when your health insurance will end. In some cases, an employer will offer to cover health care expenses. For example, when Meta (which owns Facebook and Instagram) laid off more than 11,000 employees on Nov. 9, it promised to cover terminated employees’ health care costs for six months.

Under a federal law called COBRA, workers can extend their health insurance coverage for a certain period of time if their employment is terminated. For covered employees, that time period is 18 months.

In order to get insurance under COBRA, you’ll have to pay the premium, which can be expensive. Insurance on the HealthCare.gov marketplace can be cheaper than COBRA, especially if you qualify for Medicaid.

Beyond health insurance, if you had life insurance tied to your job, it’s unlikely to follow you when you’re laid off. That could leave your loved ones hanging.

“If you’re 23 and healthy, you don’t necessarily need life insurance, but if you have a child or you take care of a partner or family members, now is the time to shop for life insurance,” Capalad says.

Manage your 401(k)

If you had a 401(k) at your employer and you were laid off, you have four possible actions to take:

• Roll your old 401(k) into an individual retirement account, or IRA. You’ll owe taxes on the rolled over amount if it’s a Roth IRA, but taxes are deferred if it’s a traditional IRA.
• When you get a new job, roll your old 401(k) into a new plan. Contact the plan administrator at your old job and ask for a direct rollover.
• Let your 401(k) be. You might pay higher fees as a former employee, and you can’t make additional contributions.
• Cash out your 401(k). Your former employer could give you a check, but they’ll withhold 20% in taxes for the distribution. It could also be deemed an early distribution, which carries a 10% penalty and potential taxes.

Exercise your stock options

If you have vested and unexercised employee shares in your former employer, you have to make a decision soon to exercise. There will be a predetermined window — usually 30 to 90 days, Capalad says — to exercise them; otherwise they’ll be returned to the company. Any unvested shares are no longer part of your portfolio.

However, it’s also possible an employer could use what is known as a clawback provision to buy back your vested shares after a triggering event, such as a layoff.

Take a beat before you start job hunting — then dive in

Your first impulse when you’re laid off may be to start job hunting immediately. Kay says that’s not an ideal way to start your search.

“You’re going to want to react by calling up everybody you know and saying ‘do you know of any jobs?’ Wrong move,” Kay says. “You’re going to want to send out your resume right away — worst move. Don’t do anything except take a deep breath first.”

After that exhalation, assess your own experience and skills so you’ll have something to talk about with people in your network.

“You need to know why you matter. You have to say ‘here’s what I’ve done for my company, and here’s what I’ll do for you,’” Kay says. And it helps if you can present why you matter in a simple, nonjargony way.

“You have to be able to explain it to your mother,” Kay says.

Once you understand what you can offer and how best to present yourself, Kay recommends using that information to update your resume, craft your LinkedIn profile and submit job applications.