It depends on the climate you live in. A lot of people might tell you to not let the dog live outside, but I can tell you that outside farm dogs do very well. Keeping the dog outside isn't going to help much with allergies though if your hubby goes outside where the dog is, or you come inside with dog hair on your clothes. Whatever you do though, don't put it on a chain or tether and do give it plenty of exercise everyday, shelter with shade, water at all times, food, bedding and love. I don't see why a Cavalier can't live outdoors in the right climate, but do be mindful of extreme weather like heat, cold, rain, snow, etc and be prepared to accommodate the dog accordingly - this goes for every breed. There are other Spaniel breeds you might want to research if you live in an area with climate trouble... Cocker, Springer, Brittany, Field, Clumber, Water, Boykin, Sussex, etc. My grandparents kept dogs (including Cocker Spaniels) outside in Missouri and they did very well, but they could run around on 350 acres. If you don't give the dog enough attention it will get behavioral problems and become unhappy because it needs to be with it's pack. You need to be willing to spend more of your day outside with the dog than inside or you'll have a sad dog. I can assure you that just about every breed is lively enough to go for walks and run in a park unless it is 90 degrees outside or the dog is unhealthy (poor diet, too fat, hypothyroidism, parasites, etc.). There are a lot of breeds that can be good with children if raised with them, and I always recommend rescue dogs. There are even breed specific rescues, but they're usually not willing to adopt to someone who won't let the dog live inside. I really can't emphasize enough though, how much you'll need to be outside with the dog... and your husband alone in the house if you're going to have a happy dog. Honestly it doesn't sound like the best family situation.