First of all, we should reflect on whether if ghosts really need money? What can they do with it? Buy food? Clothes? Live in high-rise buildings? No Westerners follow this custom, only the Chinese burns paper money. So if ghosts really do need money, does it mean all the Western ghosts will turn into beggars? This is obviously the work of immoral businessmen, who mastered the superstitious nature of laymen, and came up with paper money, paper cars, paper houses, etc. This traditional custom is, in fact, illogical.
The origin of “Burning Paper”: During the olden days of China, people practised the custom of burning silk or satin for their ancestors. Later, it was simplified to paper. This is a form of expression of filial piety from the children to their parents. Before consuming their meals, getting dressed or living in a sheltered home, they first think of their parents and ancestors, so as to not forget their kindness and the sacrifices they had made for their family. This holds a lot of significance for commemorating and respecting their ancestors. Buddhists understand the meaning of this custom, but do not necessarily express it through the burning of paper money.
Reference:
- Teachings of the Sages “Buddhist Association - Buddhists FAQs”
- Master Hongyi “Zen Enlightenment in Life - Do Not Misunderstand Buddhism”