Is a TFSA better than an RRSP for beginners?

For many beginners, a TFSA is usually the better first account because it is simpler, more flexible, and withdrawals are tax-free. An RRSP can be better if you are in a higher tax bracket now and expect to be in a lower tax bracket when you withdraw, or if you specifically want the tax deduction today.

Best simple rule:

• Choose a TFSA first if you are early in your career, have modest or uncertain income, might need the money before retirement, or want flexibility.
• Choose an RRSP first if your income is high, you want to reduce taxable income now, your employer matches RRSP contributions, or you are saving specifically for retirement.
• If your employer offers RRSP matching, take the match before prioritizing TFSA; it is usually too valuable to skip.

Key difference: TFSA contributions use after-tax money, but withdrawals are tax-free. RRSP contributions can reduce taxable income now, but withdrawals are taxed later as income.