Using a gift card for the whole family

Unfortunately it is not possible to do this.

The code can only be put onto one account and the whole amount would be put onto that one account.

Although you can go to this link Xbox gift card in the
Microsoft store and you can click on the amount drop down and select the amount of the gift card you want from $1 to $100 dollars and the system will email you a code for each gift card that you purchase. you can then give a code to each kid with the amount
that you are wanting to give to them.

The gift card money is bound to one account, it cannot be shared through different accounts.

That's lame, I don't want to have to add anything to use gift card. That's the whole point

Please go to
https://account.microsoft.com/family, sign in with your parent account, and check that your kid's Microsoft Account is added into your family.

When you say you have a gift card, is that card a Gift Card for Xbox Live Gold, or is that a currency gift card?

Is your kid able to go to https://account.microsoft.com/services/ and check their subscription status and purchase the Gold subscription?

Well I did plan on getting FarCry3 today at Meijer using a gift card but when I got there I realized the gift card was still at home *facepalm* so then I went to Family Video to use up some credit and I rented FC3 there instead.