As writers, we always want our dialogue to sound real. We don’t want it to be stiff or awkward (unless the character is) because we want our characters to sound like people, not robots.
The problem with writing the way people talk is that people don’t talk in sentences, and they don’t use correct grammar (if you use correct grammar when you talk, you’ll get made fun of, believe me). When you leave out too much grammar or don’t write in sentences, the dialogue can get pretty confusing. So you don’t want to write dialogue exactly the way people talk, or the reader may not be able to understand.
There are two basic schools of thought on this. One is to keep the grammar mostly correct and use full sentences but add in contractions and slang to keep the dialogue from sounding too formal. The other attitude writes as closely to real speech as possible without getting confusing. Writers in this school often use a couple of specific punctuation techniques:
- Showing that a person is interrupted with a dash. Put the dash right after the word that is interrupted. If the same person continues the same statement after the interruption, start that part with a dash, as well.
- Showing a pause or hesitation with an ellipse. When you use an ellipse, you don’t necessarily have to finish the thought the person was on when they paused. You can start a new idea afterward. People often pause to change their wording or take a new direction with what they were saying.
- Showing dialect using apostrophes and misspelling. With dialect, people try to write how the person speaks (what the pronunciation sounds like).
You can play around with combinations of these to try to make your dialogue more similar to how people talk. My only caution is not to go so far that it’s hard to understand. It doesn’t have to be real so long as it feels real. If it doesn’t feel stilted and fake, that’s probably real enough.