The Balance between Legalism and Grace

This is an ongoing argument in the Christian community. Recently, a mom of younger children asked me if I ever worry about how or if my girls are going to rebel against my rules. We had a long discussion about the fact that we try really hard not to stress our rules as much as our responsibility to live according to God's plan. I try to address the heart when something needs to addressed, but sometimes there have to be rules too. Scripture gives evidence that rules are necessary- hint - the Ten Commandments. But there is also Grace, God's saving grace. That grace is not a license to sin, it is a reminder not to sin. We forget all God has done for us and sin ourselves, so we as parents need to stand in the gap for our children and remind them of those things. That's a concept that older kids can grasp - the younger ones still usually just need, "Because I'm the mom and I said so!"
All of this sounds good in theory, but in practice it's hard work. The children also get to see that I need that same grace they need. They hear me yell at drivers who cut me off or won't let them eat carrots because they chew too loudly. (Yes, I'm afraid I am guilty of both of those things in the same day.) Even though I let the girls run in the house and even play ball inside (sometimes) I think they know the limits. They fail every once in a while and have to suffer the consequences of sin, but by addressing the heart maybe they are learning to govern themselves rather than live up to my rules.