Savings is must for emergency purpose. Ideally, $1000 savings for a family is enough so that if somrthing happen to a family member (assuming that it's just a minor accident), they are capable of paying the hospital bill. The rest of someone's spare money can be put on investment then for a long term profit purpose. Although it gives profit, it's not very convenient to use it for emergency purpose.
It seems to me that for each family there will be a sufficiently different amount of savings, but everyone should try to invest, otherwise you will remain poor.