Thanks to a government rebate, a check might be coming your way.

Now what? Treat yourself to an iPhone?

Not so fast.

The House of Representatives recently passed a bill that would provide tax rebates to approximately 111 million households as part of a $150 billion economic stimulus effort -- including $100 billion in one-time tax rebates to individual taxpayers.

This includes a tax rebate of up to $600 for individuals and $1,200 for married couples with an additional $300 per child. That means a family of four would receive $1,800 under the House bill.

The bill now goes to the Senate, where they are likely to make changes.

Under the current Senate version, all Americans would receive a $500 to $1,000 rebate as long as they earned a minimum of $3,000 last year.

With either version, millions of taxpayers will be getting some money back later this year. This means you will need to consider the best way to use this money.

Here are five smart ways to spend this money and five more ways to save it so you can bolster your personal finances:

1. Spend to Save

If you're going to spend the money, considerspending it in a way that will actually

save you money in the long run.

Consider what items you can purchase that will pay forthemselves and more over their lifetime.

If you are spending $3 a day at Starbucks, for example, an investment in a $400 gourmet coffeemaker that enables you to brew your own coffee can pay for itself in less than six months. Just be certain that you will actually use it and not simply have it sitting on your kitchen counter while you continue to buy Starbucks.

Another option would be to replace older appliances such asrefrigerators, washing machines, dryers or dishwashers with newer,energy-efficient models. For more information, check out

Energystar.gov. Many newer modelswill pay for themselves over time with energy savings they providecompared with older models, especially if you're replacing models over 10years old. Even if your older models are still in perfect workingorder, it can be worthwhile to replace them. Selling them to recoup abit of money or giving them to a charitable organization for the taxwrite-off will allow the newer models pay for themselves even morequickly.

2. Quit a Habit

One of the most effective ways to help your financesis to quit a bad habit, and a good way to accomplish this is to rewardyourself for doing so.

If you have a costly habit that you have beentrying to kick, use the tax rebate money as an incentive reward forreaching your goal. Earmark the money for something you truly desire,but only purchase it when you have kicked the habit.

If your goal is to stop drinking soda, for example, you can give yourself a small reward such as a dinner out each week you manage to avoid drinking it. Or, give yourself a large reward like a weekend holiday when you have been soda-free for six months. If you spend $3 a day on soda, kicking the habit will save you over $1,000 a year, meaning the reward will pay for itself many times over.

3. Home Improvements

Not all home improvements are created equal.While most money put into a home will never be recouped, there are anumber of improvements that can be made which will actually make yourhouse more valuable

when it comes time to sell.

Putting your tax rebate money toward such improvements as lighting,painting and electrical repairs can produce over 100% returns on theircost when it comes time to sell, making this a good place to spend thetax rebate.

4. Invest in Home Energy

The average home uses about $1,900 in energyevery year, according to Energy Star, but much of this cost can bereduced with better home energy efficiency.

Call your local utility tosee if they offer free or subsidized home energy audits. Alternatively, you canperform a

home-energy audit yourself . The home audit will tell you the best places to spend your money, such asincreasing home insulation or replacing drafty windows and doors thatwill lower both winter and summer energy bills.

5. Educate Yourself

One of the best ways to improve your careerprospects and income potential is to continue to learn new skills. Besure to check with your employer to see if they will pay for thistraining and education.

Some will, while others will only pay a portionor none at all. If you feel the skill is important for your careeraspirations, paying for it yourself makes sense and can mean a highersalary and more career opportunities down the road.

While spending the money is one way to improve your finances, saving it can be another quality option:

1. Credit Card Debt

If you have credit card debt,

paying down that debt should be the top priority for the tax rebate. This can make a large dent in your debt and

supercharge your debt reduction plan.

The key is to remember that once the debt is paid off, you should keep it off and not build up the credit card balance again.

2. Use it for an Emergency Fund

With the

economy on shaky ground, having an emergency fund in place is a must. Stick the tax rebate into a

high-interest online savings account and have it in place for an unexpected emergency.

Maintaining a solid emergency fund is animportant safety net, and while the tax refund won't fully fund thisemergency account, it's a good beginning.

3. Retirement Fund

If you haven't started saving for retirement, thetax refund gives you the perfect excuse to begin. This is especiallytrue if you have a 401(k) plan at work that matches a certainpercentage of your contributions that you haven't been takingadvantage of. If not, open up an IRA and use this money to help fundit and help ensure that you

have a nice nest egg when you reach retirement.

4. College Fund

College costs continue to rise at a pace far greaterthan inflation, making saving for this cost even more important. Thetax refund is a perfect opportunity to begin or increase your kid'scollege fund, especially since part of the refund is a bonus forhaving kids.

Setting up a

529 college savings plan with part or all of the tax rebate is a good opportunity to help fund your child's future education.

5. Investing Account

While the minimum amount needed to open a mutualfund varies, many require a minimum of $1,000 or more as an initialdeposit to begin investing, although some charge less.If the initial deposit minimum has kept you away from investing inmutual funds, the tax rebate can be used to help get you started.

Whether you decide to save or spend your tax rebate, take the time to see how utilizing it can best help your finances down the road toensure you get the most out of this one-time monetary gift.

Jeffrey Strain has been a free-lance personal-finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.