In the example below, I typed out: t-e-s-t-r:
Note that if I now hit the spacebar or any punctuation mark, Testr will be replaced by the suggesteed word in blue at the center of the screen just above the keyboard: Tester. However, if I tap the word in blue on the left (which is the spelling I actually want), this happens:
Not only does it accept Testr as the desired word, but it gives me the opportunity to permanently save it to the dictionary ("Touch again to save").
Alternatively, go to Settings -> Language & Input -> Personal Dictionary and add words til your heart's content.