This is a huge question and one that there appears to be much confusion about. Unfortunately, religion has done very little to clarify the matter. In many cases, religion has only added to the confusion that already exists. Some would have us to believe that living in faith means that you know exactly what God is going to do. For instance, there are many who teach that if a person is sick, all he has to do is believe that he is going to be made well. Essentially, that man's faith forces the hand of God - if he only believes strongly enough, things will happen just as he thought they would.
But I ask you, is that really how faith works? As with all other matters, we'll want to see what God's Word has to say about our question. It will help us first to define what faith is. Thankfully, the Bible provides us with a very straight-forward definition of faith: "Now faith is the substance of things hoped for, the evidence of things not seen" (Heb. 11:1). Fair enough, but what does that mean? The context of this verse has to do with the promises of God; namely His promise of salvation and the truths of His Word. So essentially the author of Hebrews is telling us that a man of faith believes the Word of God. Having been fully persuaded of God's truth, he then orders his life accordingly.
So how does it work? Again, it will aid us to consider the examples provided in the Bible. One awesome example is provided in Romans 4. In that amazing chapter of God's Word, Paul teaches us about the faith of Abraham. He said that it was by faith alone that Abraham was saved: "Abraham believed God and it was accounted to him for righteousness" (Rom. 4:3). How do we know that the righteousness of God equals salvation? Because Paul would later go on to write that "the Lord shall not impute sin" to those who have placed their faith in Christ (Rom. 4:8).
So we know that Abraham was saved through faith, but how did he live by faith? The Bible answers this question too. It says that Abraham was "fully convinced that what (God) had promised He was also able to perform" (Rom. 4:21). Please don't miss this! Faith doesn't mean that you know what God is going to do. Rather it means that you are completely persuaded that God has the power to do anything you ask or anything He has promised.
Just because you believe God is going to do something, does that mean He is bound to do it? Of course not! That's not faith, that's presumption. Consider this example. Let's say you've got a huge debt that needs to be paid and you don't have the money to pay it. Presumption believes that God is going to pay off all my debts. Faith believes that God is able to pay off all my debts. Does faith require that He will? No, in fact faith may require that God will provide you with a job that will allow you to pay all your debts.
Bottom line: Living by faith means living each moment in full confidence that the all-powerful God of heaven and earth "is able to do exceedingly, abundantly above all we can ask or think" (Eph. 3:20). Don't ever presume to know that God will do; just live your life in full confidence that He is more than able to do all things for the glory of His name.
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