In short: An emergency fund (reserve) is money set aside only for unexpected costs — illness, repairs, losing a job — kept accessible in an account, not in something you would first have to sell.
Simply put: The usual rule is 3–6 months of expenses; it is a convention, not a research result. Data show that even a small buffer reduces financial stress and the need for expensive credit. The order: first a small reserve (for example one month), then pay off expensive debt, then let the reserve grow. The self-employed and single-income households need a bigger one.
Example: A family's essential expenses are €1,200 a month. The first goal is €1,200; the long-term goal is between €3,600 and €7,200.
Watch out: Myth: "My credit card is my reserve." It is a debt that gets more expensive exactly when things are hardest. A reserve is not money for investing either.
Source: Consumer Financial Protection Bureau — https://www.consumerfinance.gov (*) · European Commission and OECD/INFE, framework for adults (2022) — https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en