In the Buddhist belief structure, Hell is an inbetween place of learning, where your spirit resides while waiting to be reborn; it is also a place of punishment. Unlike Christian beliefs, Hell is not run by Satan or any other evil creature; rather, it is run by the God of Hell. To be more precise, it is only called Hell because, when Christian missionaries came to these countries, to the native Asians 'Hell' was the closest English word to describe this afterlife.
For thousands of years, cultures practicing Buddhist beliefs have practiced the tradition of creating paper money, which is legal tender in Hell. This money is called hell notes, also known as ch'ien or spiritual money. As times changed, and society grew and evolved, and other means of keeping, transferring, and spending money became available, products available to use in the way of hell notes became available. Hell notes and other related products are found in many Asian countries, but most prominently in China. As with many death-related practices in Asian countries, this tradition pre-dates Buddhism; however, it has a Buddhist explanation now.
In addition to hell notes, which can be read about here, products such as a Bank of Hell savings account pass, checkbook, credit card, and passport can be purchased, all of which usually have an illustration of the God of Hell. These items can be bought all in one package, known as Hell's travel kit. In addition to this, one can even buy paper models of such things as houses, cars, and servants. Several of these are obviously relatively new additions to the hell notes ritual, but rituals have a tendancy to accomodate the times.
These items are usually purchased following the death of a loved one, or in preparation of the Chinese New Year, and are then burned at the appropriate times. It is believed that when the items are burned, the fire releases the energy, or essence, of what the object is representing. When one burns the passport, the ancestor is able to visit, during rituals, the person who burned it; when the savings account pass is burned, a bank account is opened in the Bank of Hell for the deceased person; when the hell notes are burned, the money is deposited in the individual's savings account; when the checkbook is burned, the person is able to write checks; and when the credit card is burned, the deceased relative has a credit card with which to purchase items until hell note denominations are burned for them. In the same manner, if a paper house or car is burned, that individual then has a house or car similar in appearance to the one burned; if the image of a paper servant is burned, the loved one has a servant to carry out their needs.
With the money the deceased receives, they are able to buy basic amenities and comforts during their stay in Hell, almost anything a person could buy on Earth, such as a computer, clothes, or books.
Altogether, burning these items is part of a beautiful, long-standing tradition which symbolizes love and respect for those who have come and gone before us.