Career breaks can happen for all sorts of reasons. Maybe you decide to take time off to study, travel, care for someone or just breathe after years of non-stop work. Or maybe life throws something unexpected your way, and you need to step back. Whatever the reason, the one thing that usually gets tricky is money. The paycheques stop, but the expenses don’t. Rent, bills, groceries—everything keeps going. That’s why it helps to have something in place that keeps a bit of income coming in every month. There’s a simple way to set that up, and it can make those in-between phases a lot less stressful.

We’re talking about a monthly income that does not depend on your job or business. It’s something you plan for while you’re still earning so that later, when you take a break, the money still shows up like clockwork. It’s not about chasing returns or taking risks—it’s about steady support when you need it the most. Whether your break lasts a few months or stretches longer, having a plan that pays you regularly can ease a lot of pressure. It gives you the space to focus on what matters without worrying about finances.

What is a monthly income plan?

A monthly income plan is a type of mutual fund that focuses on giving you regular payouts. It mainly invests in debt instruments like bonds and a smaller portion in equities. These plans are designed to offer a steady flow of income in the form of dividends or interest without taking on too much risk. While they are often used by retirees, they can also be helpful for anyone who wants a little more stability in their income, especially during breaks in active earning.

Know the basics of a monthly income plan

Monthly income plans usually keep most of the money in debt securities, which are known to be more stable and less risky. A small portion is invested in equities to add some growth potential. The aim is not to create big profits but to maintain regular payouts. These payouts can help with budgeting and day-to-day expenses, especially if you do not have another fixed source of income. However, it is important to note that these plans do not guarantee payouts every single month. If the market is down or if the fund does not earn enough, the plan may skip the payment.

Taxation of monthly income plans

In India, monthly income plans are treated like debt funds for tax purposes. If the fund has less than 65% of its money in stocks, it follows debt fund rules. Any dividend you receive from the plan is added to your total income and taxed according to your income slab. If you sell the fund and make a profit, short-term capital gains tax applies if held for less than 36 months. If you hold the fund for more than 36 months, long-term capital gains tax will be charged, which is usually lower.

How do monthly income plans help?

These plans are useful when you want regular income without relying on your savings too much. For example, if you are taking a break from work, studying or simply stepping back for personal reasons, a monthly income plan can give you the confidence that at least some of your expenses will be covered. It helps in budgeting better and avoids the need to dip into emergency funds or break long-term investments. While not a complete income replacement, it acts like a support system that helps you manage money with a little more ease.

The bottom line

A monthly income plan can be a useful addition to your financial toolkit, especially during times when your regular earnings are on hold. It brings a sense of stability without locking you into long-term commitments. Before investing, make sure to check if the payout style, risk level and returns align with your needs. Understand how much you need to invest today to get the monthly support you want in the future.

To figure out how much you should invest to get the monthly income you need, try using a savings calculator to plan your finances more accurately.