GHOST MONTH
The seventh lunar month in the traditional Chinese calendar is called Ghost Month. These dates vary from year to year, in 2013, Ghost month runs from August 7 to September 4, and the Ghost Festival is on August 20.
On the first day of the month, the Gates of Hell are sprung open to allow ghosts and spirits access to the world of the living. The spirits spend the month visiting their families, feasting and and looking for victims.
There are three important days during Ghost Month. On the first day of the month, ancestors are honored with offerings of food, incense, and ghost money - paper money which is burned so the spirits can use it. These offerings are done at makeshift altars set up on sidewalks outside the house.
Almost as important as honoring your ancestors, offerings to ghosts without families must be made, so that they will not cause you any harm. Ghost month is the most dangerous time of the year, and malevolent spirits are on the look out to capture souls.
This makes ghost month a bad time to do activities such as evening strolls, traveling, moving house, or starting a new business. Many people avoid swimming during ghost month, since there are many spirits in the water which can try to drown you.
The 15th day of the month is Ghost Festival, sometimes called Hungry Ghost Festival. The Mandarin name of this festival is zhōng yuán jié (中元節 / 中元节). This is the day when the spirits are in high gear. It’s important to give them a sumptuous feast, to please them and to bring luck to the family. Taoists and Buddhists perform ceremonies on this day to ease the sufferings of the deceased.
The last day of the month is when the Gates of Hell are closed up again. The chants of Taoist priests inform the spirits that it’s time to return, and as they are confined once again to the underworld, they let out an unearthly wail of lament.
Source: http://mandarin.about.com/od/festivals/a/ghost_month.htm
