After falling from a bridge, you find a sword and return to Potos.
Get Equipped
When you arrive in Potos, go to the shop (just south of where you entered town) and buy a Bandanna. If you can't afford it, you can either go back to the forest and fight Rabites until you have enough, or just wait and buy it later.
Press Y to go into the menu to equip the bandanna. If you don't equip it, it won't protect you. While in the menu, you can press up or down to switch menus, and press left or right to move between the options. Press B to select an option. Press Y again to exit the menu.
Save Your Game
You can go into the Inn and talk to the innkeeper to save your game. You don't have to rest at the inn to save. You can say No when asked if you want to stay, and then you will be asked if you want to save. (If you do rest at the inn, you will be asked afterward if you want to save.)
Visit the Elder
When you are done exploring town, go to the house in the northeast corner. Walk up to the old man. After a cutscene, you must fight the Mantis Ant.