TFSA vs RRSP vs FHSA: Which Should You Fill First in 2026?

Short answer: for most beginners in Canada, the order is: a small emergency fund, any employer RRSP or pension match, pay off high-interest debt, finish your emergency fund, then an FHSA if you might buy a first home, then a TFSA (if your income is lower) or an RRSP (if your income is higher), then the other one. It's a general framework, not personal advice, but it fits a lot of people.

The three accounts at a glance (2026)

TFSA: tax-free and flexible

A TFSA isn't just a savings account. You can hold ETFs, stocks and bonds in it, and every dollar of growth is tax-free. You can withdraw any time, and whatever you take out is added back to your room on January 1 of the next year.

Watch out: contributing more than your room costs 1% per month on the excess. The most common mistake is putting a withdrawal back in the same year. Check your exact room in CRA My Account.

FHSA: for a first home

If you haven't lived in a home you owned this year or in the previous four years, the FHSA gives you an RRSP-style deduction going in and TFSA-style tax-free withdrawals for a qualifying first home.

• Room only starts building once you open one, so open it early, even with $0.
• You can carry forward up to $8,000 of unused room, so the most you can add in one year is $16,000.
• If you never buy, you can transfer it to your RRSP tax-free without using RRSP room.
• Combined with the RRSP Home Buyers' Plan (up to $60,000), that's up to about $100,000 per person toward the same home.

RRSP: for retirement

RRSP contributions reduce your taxable income. At a 30% marginal tax rate, a $5,000 contribution can mean about a $1,500 refund, and investing that refund is how you get the full benefit. Withdrawals are taxed as income. The deadline for 2026 contributions is March 1, 2027.

TFSA or RRSP: how to choose

Compare your tax rate today with the rate you expect in retirement. If you earn more now than you will later, the RRSP's deduction is usually worth more. If your income is lower today, or you might need the money before retirement, the TFSA is usually the better choice. Many people use both.

Example: Jordan, 27

Jordan earns $62,000, rents and hopes to buy a first home in about five years. Jordan takes the full 3% employer match on the group RRSP, opens an FHSA and contributes the $8,000 yearly maximum, invests the FHSA tax refund in a TFSA, and adds whatever is left to the TFSA. At a hypothetical 4% return, $8,000 a year in the FHSA grows to about $44,199 in five years, tax-free for the down payment. Hypothetical example for illustration only.

Common questions

Can I have a TFSA, an RRSP and an FHSA at the same time?

Yes. They have separate limits, and many people use all three for different goals.

Is the FHSA better than the RRSP for buying a home?

For a first home, the FHSA is usually the better first choice because withdrawals don't have to be repaid. The Home Buyers' Plan lets you borrow from your RRSP, but you must pay it back. You can use both for the same home.

What should I actually buy inside these accounts?

Many beginners use a low-fee, all-in-one ETF, which holds thousands of companies in a single fund. Fees matter: a 2% fund fee can cost tens of thousands of dollars over a few decades compared with a 0.2% fee.

The full plan

The Investing Starter Guide, Canadian Edition 2026 covers each account, what to buy, how to place your first order and a 30-day plan. The Canadian Starter Kit adds a Portfolio Tracker that calculates your TFSA room and FHSA carry-forward for you.

Educational content only, not financial, tax or legal advice. Limits are 2026 figures; confirm current numbers with the CRA (canada.ca).