Many advanced countries use child allowances to lessen the burden of parenting and to protect the basic economic security of children. Child allowances are generally financed in one of two ways: taxation and social insurance. Each modality has its advantages and limitations. This paper has the following three goals: 1) to examine the principles underlying the financing of social welfare; 2) to analyze and compare different ways of financing child allowances, primarily in advanced countries; 3) to discuss the possible ways of financing child allowances in Taiwan. The research shows that social insurance performs better in terms of efficiency, stability, sustainability, ring-fencing, and transparency, but taxation performs better in terms of equity, collectability, and immediate revenue flow. The two modalities perform equally well in terms of sufficiency, growth, affordability, and solidarity.