Does colloquial Estonian require a different approach to grammar?

I’ve reached an intermediate plateau where my textbook Estonian is grammatically perfect but sounds completely foreign to my Estonian grandmother. She uses so many contractions and endings that don't match the rules I studied. I want to sound natural, but I'm worried that 'un-learning' the formal grammar will hurt my progress in official certifications. How do you balance formal writing standards with the casual, spoken Estonian you hear in the family?