TFSA, RRSP or FHSA: Which Should You Fill First?
By Cadence Money · August 15, 2026 (updated October 4, 2026) · 3 min read
The Short Answer
There is no universal order, but there is a common one:
- Any employer match, in full.
- Pay off high-interest debt.
- The FHSA, if a first home is realistic.
- RRSP or TFSA, decided by your tax rate today against the rate you expect in retirement.
A high income now favours the RRSP deduction. A low income now, or a much higher one expected later, favours the TFSA - and RRSP room keeps for those years.
General information about how these accounts work, not financial advice. For anything that turns on your own numbers, talk to an accountant or a fee-only planner.
How the Three Accounts Differ
| RRSP | TFSA | FHSA | |
|---|---|---|---|
| Deduction on contribution | Yes | No | Yes |
| Growth taxed | No | No | No |
| Taxed on withdrawal | Yes | No | No, for a qualifying home |
| Withdrawn room comes back | No | Next calendar year | Not applicable |
| Main purpose | Retirement income | Anything | First home |
The row that trips people up is the third. An RRSP defers tax rather than saving it: you skip tax at today's rate and pay it at your retirement rate. That wins when today's rate is higher, and loses when it is lower.
The Order Most People Use
Take Any Employer Match
A matched group RRSP or pension contribution is an immediate return nothing else here competes with.
Clear High-Interest Debt
Not an account, but a balance costing a high double-digit rate outruns any sheltered return.
Open the FHSA, If a First Home Is Realistic
The only account with a deduction going in and tax-free money coming out. Room only builds once it is open, so people open one early.
Then RRSP or TFSA, on Your Tax Rate
The deduction is worth more the higher your marginal rate. Early in a career, on parental leave or between jobs, it is worth less now than later.
RRSP Room Never Expires
The Trap: Losing Track of Your Room
Over-Contributing Costs a Penalty Tax Every Month
- The room in CRA My Account is not live - partway through a year it can be badly out of date.
- TFSA room from a withdrawal only comes back next calendar year, so withdrawing and re-contributing in the same year is a common, costly mistake.
- If you contribute at more than one institution, none of them sees your total.
The fix: take the CRA figure as your starting balance at the start of the year, then track your own contributions as you make them.
Tracking Your Room in Cadence Money
Cadence Money does this with goals: one per account, with that year's limit as the target and contributions counting toward it. You see the room left across every institution, without waiting for the CRA to catch up. The full walkthrough.
You enter the limit yourself - Cadence Money does not read your room from the CRA, and no app can. What it removes is the arithmetic and the scattered records, not the need to know your number.
Track Your Room Alongside Everything Else
Cadence Money handles TFSA, RRSP, FHSA, RESP and RDSP as real account types, with contribution room tracked as goals and your net worth updated alongside. Start a 14-day free trial.
Start Your Free TrialFrequently Asked Questions
An RRSP gives you a tax deduction when you contribute and is taxed when you withdraw, so it shifts income to later in life. A TFSA gives no deduction, but growth and withdrawals are completely tax-free. An FHSA is the unusual one: it gives a deduction on the way in like an RRSP and comes out tax-free like a TFSA, provided the money goes toward a qualifying first home.
It depends mainly on your marginal tax rate now versus in retirement. An RRSP deduction is worth more when your current rate is high, and the eventual withdrawal costs less when your retirement rate is low. If your income is currently low, or you expect it to be much higher later, many people prioritise the TFSA and keep RRSP room for higher-earning years. This is general information, not advice - the right answer depends on your full situation.
Opening one starts the clock on the account, and unused FHSA room only begins accumulating once the account exists. If the money is never used for a qualifying home, it can generally be transferred to an RRSP or RRIF without using RRSP room. Confirm the current rules and deadlines with the CRA before relying on any of this.
The CRA charges a penalty tax on excess contributions, typically assessed monthly until the excess is withdrawn. This is the main practical reason to track your own contributions rather than assuming your bank or the CRA My Account balance is current - the CRA figure often lags the calendar year.
Check your official room in CRA My Account, then track your own contributions through the year, because the CRA figure is not updated in real time. In Cadence Money you can do this with a goal per account, where the target is that year's limit and contributions count toward it. You enter the limit yourself - Cadence Money does not read your room from the CRA.