Many make the mistake of thinking that we are saved by grace, but that we then become "holy" by our own efforts. Nothing could be further from the truth.
We are justified by grace and we are sanctified by grace as well. Grace is necessary in both cases, and it is unmerited in both cases. The key difference is that in justification we are passive, but in sanctification we actively cooperate with the Holy Spirit in receiving and responding to God’s grace.