Ephesians 2:8 For by grace are ye saved through faith; and that not of yourselves: it is the gift of God:
When we hear the word 'grace' we quickly relate it to God's mercy in granting us grace in salvation. And it is true that anyone saved has been saved completely by the grace of God. The grace of God granted the sinner has been correctly understood to mean that God saved the individual through unmerited favor. That is, the one saved was saved due to nothing he or she did. Grace is given completely apart from any good works. God’s grace is given to dirty rotten sinners that do NOT deserve it. Nor have they done anything whatsoever to earn it. It is a free gift of God’s forgiveness of sins to the worst sort of people, to the chief of sinners chosen simply by God’s good pleasure.
But grace is also something that a true child of God ought to exhibit in their lives. The Greek word (#5485) is also, strangely, translated as 'thank' or 'thankworthy' and as 'acceptable' in some places:
1 Peter 2:19 For this is thankworthy (#5485), if a man for conscience toward God endure grief, suffering wrongfully.
20 For what glory is it, if, when ye be buffeted for your faults, ye shall take it patiently? but if, when ye do well, and suffer for it, ye take it patiently, this is acceptable (#5485) with God.
21 For even hereunto were ye called: because Christ also suffered for us, leaving us an example, that ye should follow his steps:
We could read verse 19 above this way,
"For this is grace, if a man for conscience toward God endure grief, suffering wrongfully."
And, we could read verse 20 this way:
"but if, when ye do well, and suffer for it, ye take it patiently, this is grace with God."
And then verse 21 reminds us of the example that Christ showed of suffering on our behalf. By referring to Christ's example we can understand why God tells us that 'this is grace' to endure grief and suffer wrongfully. That's exactly what Christ did for His elect people.
Since we live in an extremely wicked world there are many opportunities given to us to exhibit grace as Christ exhibited His grace to us.
The Greek word #5485 is also found in Luke chapter 6:
Luke 6:31 And as ye would that men should do to you, do ye also to them likewise.
32 For if ye love them which love you, what thank (#5485) have ye? for sinners also love those that love them.
33 And if ye do good to them which do good to you, what thank (#5485) have ye? for sinners also do even the same.
34 And if ye lend to them of whom ye hope to receive, what thank (#5485) have ye? for sinners also lend to sinners, to receive as much again.
35 But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.
36 Be ye therefore merciful, as your Father also is merciful.
By loving them that love you what grace have ye? Christ loved them (His elect) that did not love Him. The implication is that to love those that do not love you is showing forth God's grace.
By doing good only to them that do good to you, what grace have ye? Jesus did good to those that did Him no good. The implication is, that by doing good to those that do you no good you are showing forth the characteristic of God's grace.
By lending only to those that you hope to receive something from, what grace have ye? Jesus gave to those that gave nothing to Him nor could they. The implication is, that by lending to those that cannot give anything back in return we are showing forth God's grace.
Verses 35 & 36 sum up what God's grace is. It is loving one's enemy. Doing good and lending without thought of reciprocation. For God is kind to the unthankful and to the evil. Therefore, we also should be kind to the unthankful and evil all around us. This is grace.