The grace of God is widely misunderstood by Christians today. I misunderstood it for decades, to my humiliation. So I can easily understand why and how others can be misled.
In fairness to the misinformed, you won’t find a definition in the Bible, at least explicitly. And many of those interpreting the Bible for you in church pulpits today won’t offer you one, other than the tried and true “Unmerited favor”. Well, of course it is favor, and because of who we are, it is unmerited. But this old saw doesn’t shed near enough light on its purpose or scope.
In searching for a definition, the one that I feel best describes its efficacy is provided by Dallas Willard:
“Grace is the action of God in our lives to accomplish what we cannot do on our own.”
Jesus was the harbinger (John 1:17) of God’s grace to the world. He did this by announcing that eternal life could be found in the Kingdom of God, which was in our midst, and that we were to seek it, for all who believed. Now, the Kingdom of God is the place where God is acting among its inhabitants. And it is available to all who believe, here and now. He gives His grace to us so that we can act with Him in carrying out His purposes, something we could not do by ourselves. In the Kingdom, there is intimate interaction between the Jesus follower and God.
The agent of this Grace — the One who dispenses it as our needs require — is the Holy Spirit. Galatians 5:22-23 explains this by reciting the gifts of grace extended to the believer:
 But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness,  gentleness, self-control; against such things there is no law.
Long-time followers of Christ will confirm, however, that this dispensing of grace is not done by the Spirit for no reason. One who would receive, of necessity, one or more of these graces is one who is purposefully engaged in a work or trial in the Kingdom for which he is naturally under-equipped (as we all are).
In this video clip, Steve Gregg recounts the childhood story of Corrie Ten-Boom, following the death of her mother, and her resultant fear of dying. It is a poignant testimony to the power of grace to comfort and sustain us…at just the right time. (The first 30 minutes or so of that video are a powerful witness of God’s grace that I highly recommend to you.)
When needed, the Spirit immediately responds and grace is dispensed and received. To put it another way, grace is not dispensed because a person believes a particular doctrine, attends his church service regularly, or has memorized his weekly Bible verse. It is for those who, in being obedient to Christ’s commands to love their neighbor, and follow Him, find themselves to be lacking and in need of His help in carrying out His command. This was certainly Paul’s situation.
In 2 Corinthians Paul writes of his pleading with God to remove “ a thorn in … the flesh” that plagued him during his ministry career. He then records God’s response:
2 Corinthians 12:9 (ESV)
 But he said to me, “My grace is sufficient for you, for my power is made perfect in weakness.” Therefore I will boast all the more gladly of my weaknesses, so that the power of Christ may rest upon me.  For the sake of Christ, then, I am content with weaknesses, insults, hardships, persecutions, and calamities. For when I am weak, then I am strong.
Paul came to the realization that his dependency on God’s grace would be rewarded with God’s provision. Later on he says even more emphatically:
2 Corinthians 9:8 (ESV)
 And God is able to make all grace abound to you, so that having all sufficiency in all things at all times, you may abound in every good work.
This doesn’t leave much out. God’s grace, Paul says, is all you need, ever, for anything. You don’t need a 401K or a full bank account. You don’t need a degree from the right University. You don’t need a house in the best school district. You don’t need an ideal marriage. You just need grace as you pursue obedience to Him. And with it you can abound in every good work. God sees to it.
The reason for most Christians’ misunderstanding of grace is that they have been indoctrinated that it has a singular purpose – forgiveness of sins — as spelled out in, among other passages, Ephesians 2:8:
 For by grace you have been saved through faith. And this is not your own doing; it is the gift of God,  not a result of works, so that no one may boast.
The conventional Christian mental model is that: a) we’re hopeless sinners, unworthy of any favor of God, and so b) when we find ourselves committed to following Jesus it must have been God’s grace that enabled our conversion. And this result is true. Grace is instrumental in our salvation. But it is only the very tip of the iceberg.
It should not escape our notice that God apparently expects us to engage with Him in His work in the Kingdom. There seems to be a strong correlation between God extending His grace to us and His purpose that we engage with Him, having been equipped to abound in the work within His Kingdom.
Living your life for God and in dependence on God is living in the Kingdom of God. This is Jesus’ entire ministry. Once there, by the Holy Spirit’s gift of grace, it is easy and natural to carry out His commandments to love God and love your neighbor. Since you’re no longer consumed with concern for your own needs, you can concentrate on meeting others’ needs. You rest in the assurance that God will provide for you and sustain you through all of life’s trials. And so your whole focus and effort can be redirected from yourself to others.
This is the role of grace in the Christian’s life, not simply the agency of his salvation. Too few today understand the power of God through His grace that is available to all who choose to depend on it.