During the Summer of 2002, I worked for Brooks Brothers Clothiers—America's premier men's clothing store since 1818. One of the reasons I got a job without any previous retail experience was because I wore a pocket square during my interview. This is yet another example of one of the fundamental laws of men's dressing and why I devote an entire chapter to the subject:
A pocket square, or pocket handkerchief, is a piece of silk, cotton, or linen folded and placed into the breast pocket of a jacket. Without one, your pocket looks barren. Three fabrics exist for pocket squares: silk, linen, and cotton. Silk provides a soft flowing look to your ensemble. Usually I wear the puff fold (see below) when I wear silk pocket squares. Linen gives a more crisp look to the fold and that certain stylishness that comes along with linen garments. Cotton is a cheaper substitute for linen—crisp but without the finer touches. As far as color is concerned, white is always appropriate. However, if you'd like to wear a colored square, try to match the color with some color in your tie, or your shirt if you're not wearing a tie.
Never wear a pocket square that matches your tie exactly. Cheap department stores sell such combinations. Don't wear them!
Pocket squares are relatively cheap. You can always go buy cotton handkerchiefs and cheap silk squares are also easy to come by. However, one thing you might want to try (especially if you can sew) is to buy ladies' silk blouses at a second-hand store then cut and sew them into squares. Also, check out old ties at second-hand stores; you can cut them up too.