Times are tough. Unemployment is hitting numbers we haven't seen in over a decade, and companies are looking to cut costs.

And while the quick reaction of managers may be to lay off employees, that isn't always the most cost-effective choice.

"Cutting back on employees may be the easiest way to save money, but it's very short-term thinking," says Bette Price, a certified management consultant in Dallas.

Once the costs of laying off an employee are totaled -- severance, a smaller work force, heavier workloads for other employees, and the possibility there may not be the same level of talent available once the tough times are over -- it makes sense for companies to consider other cost-cutting moves.

If you haven't been handed a pink slip, you've probably seen plenty of cutbacks already -- cuts in company travel policies or canceling the company party during the holidays.

And then there are those good-news, bad-news money-saving measures that may affect your finances but at least allow you to keep your job: wage cuts or freezes (attention, White House personnel), reduced work weeks, downgraded benefits or furloughs.

More Salary Freezes

According to a survey conducted by consulting firm Watson Wyatt Worldwide in December, 13% of respondents reported that their companies had instituted salary freezes, up from just 4% who reported company freezes in October. The number of companies expecting to freeze salaries this year also rose between surveys, to 19% in December from 12% in October.

More companies surveyed in December also reported likely salary reductions, reduced workweeks, a reduction in the employer 401(k) match, and reductions in other employee programs over the next 12 months. And those numbers are expected to rise.

"This is the time of the year that many companies are making final decisions about their merit budgets," With rising food and medical costs, salary freezes and other cutbacks are veiled pay cuts for most workers. And while consumer prices could stabilize this year, a stagnant or reduced salary still strains your budget and savings plans.

When you do get that cost-cutting memo, don't panic.

"You may be living fine right now without that bonus,". "It's highly likely that you are going to be just fine."

Instead of going into panic mode, you should take a serious look at your budget and take control of your spending.

Cut Family Expenses

"See if there is anything you can reduce without affecting your lifestyle too much," .By taking the time to really scrutinize your budget, you can conceivably reduce 10% to 15% of your expenses.

"Just the exercise of going through and doing a close analysis of your spending ultimately may yield some opportunities to save and make [these cuts] not have such an impact," "If you can find 15 categories and save a measly ten bucks out of each, you'd have an extra Rs 6000 a month" to make up for shrunken wages.

Also, see if your company can make up for the cuts. For example, to save on your commuting expenses, "see if your employer will allow you to work remotely, like from home,".

Changes in compensation may also spur you to start rethinking your savings strategy.

If you usually contribute beyond what your employer matches for your 401(k) -- provided your employer still does so -- you might consider cutting back your contribution,. "You might have to do something counter to what you usually do when you're in this belt-tightening mode."

If an employer does decide to discontinue the 401(k) match, "it might be time to change the prioritization of your saving strategy,".

Check your eligibility for a Roth IRA and consider maxing out contributions to that savings vehicle first, before contributing fully to the 401(k).

"Any contributions that you do make [to a Roth IRA] are accessible without taxes or penalties down the road," he notes -- a plus if after any wage or benefits cuts you find yourself in need of money right away. (This applies only to contributions to a Roth IRA. You need to be 59½ and have had the account for at least five years to avoid any penalties on withdrawing earnings.)

Secure Your Job

However, Prestige's Mr. Williams says major changes in retirement investments should be a last resort. If you make the necessary budget adjustments, a salary freeze or other cuts for one or two years probably won't drastically hurt your overall life savings plan, he says. "We go through these severe economic cycles," but things do eventually improve.

Now is also the time to make sure you secure your job. "Show up early, stay late," she says. "Have face time with your boss, volunteer for projects, anything you can do to improve how you appear in your boss's eyes."

And remember, do your best to stay positive. Don't put your job in jeopardy by complaining or slacking off.

"The glass is half-full," You've still got a job.