A pool of easily accessible cash, kept separate from long-term investments, specifically set aside to cover unexpected expenses or a sudden loss of income without needing to sell investments or take on debt.
Investments can drop in value at exactly the wrong moment — a job loss often coincides with a rough economy, which is also when markets tend to be down. An emergency fund exists so a surprise car repair, medical bill, or period of unemployment doesn't force you to sell investments at a bad time, or reach for a high-interest credit card, just to cover the gap.
Common guidance is 3-6 months of essential living expenses, held somewhere safe and liquid (a high-interest savings account, not the stock market). People with less stable income, like freelancers, often lean toward the higher end; those with very stable jobs and other safety nets sometimes keep less.