Which registered account to open first: RRSP, TFSA, or FHSA

You can't open all three at once. Most banks will push the RRSP because they make more money on it, but the math doesn't care about their commission structure.

The answer depends on your income, not your age or how much you've saved. Below roughly $60,000, the TFSA wins. Above that, the RRSP usually does. If you're planning to buy a house in the next few years, the FHSA changes everything.

Why income matters more than anything else

Your RRSP contribution gets you a tax refund based on your marginal tax rate. At $45,000 in Ontario, you're paying about 24% on your last dollar earned. Put $5,000 in an RRSP and you get roughly $1,200 back from the government.

At $80,000, you're paying about 31.5%. Same $5,000 contribution gets you roughly $1,575 back. The higher your income, the bigger the refund - and the more sense an RRSP makes over a TFSA.

But here's what most people miss: that refund isn't free money. You'll pay tax when you withdraw from the RRSP later. The strategy only works if your tax rate is lower in retirement than it is today. For most Canadians earning over $60,000, that's a safe bet.

TFSA first if you're starting out

The TFSA is simpler. Money goes in after-tax, growth and withdrawals are both tax-free forever. No refund upfront, but no tax bill later either.

This makes it better when your current tax rate is low. If you're earning $40,000, that RRSP refund is only saving you about 22% in combined federal and provincial tax. You can probably beat that by letting your money grow tax-free in a TFSA for decades.

The TFSA also gives you flexibility. You can withdraw money anytime without penalty - useful when you're younger and your financial situation changes fast. Try that with an RRSP and you'll pay withholding tax, lose the contribution room, and potentially push yourself into a higher tax bracket.

FHSA if you're buying a house

The FHSA combines the best of both accounts, but only if you're planning to buy your first home. You get the upfront tax deduction like an RRSP, plus tax-free growth and withdrawal like a TFSA - as long as the money goes toward a home purchase.

At $70,000 in Ontario, maxing out the $8,000 FHSA contribution gets you roughly $2,500 back. That money grows tax-free, and when you withdraw it for a house down payment, you pay no tax on the growth either.

The catch: if you don't buy a house, the FHSA becomes less flexible than either alternative. You can roll it into an RRSP, but you can't just withdraw the money tax-free like you could from a TFSA.

The practical order

Most people should open accounts in this order:

1. TFSA first if you're earning under $60,000
2. FHSA first if you're earning over $60,000 AND planning to buy a house within 15 years
3. RRSP first if you're earning over $60,000 and not buying a house anytime soon

The 2025 contribution limits are $7,000 for TFSA, $32,490 for RRSP, and $8,000 for FHSA. You don't have to max them out - even $100 a month in the right account beats $500 in the wrong one.

TaxSplit.ca will show you the exact refund for your income and province, which removes most of the guesswork from this decision.

Start with one account, get comfortable with it, then add others as your income grows. The biggest mistake is analysis paralysis - not opening any account while you debate which one is perfect.