Question: "How can believers be in the world, but not of the world?"
Answer: When we read of the "world" in the New Testament, we are reading the Greek word cosmos. Cosmos most often refers to the inhabited earth and the people who live on the earth, which functions apart from God. Satan is the ruler of this "cosmos" (John 12:31; 16:11; 1 John 5:19). By the simple definition that the word world refers to a world system ruled by Satan, we can more readily appreciate Christ's claims that believers are no longer of the world—we are no longer ruled by sin, nor are we bound by the principles of the world. In addition, we are being changed into the image of Christ, causing our interest in the things of the world to become less and less as we mature in Christ.
Believers in Jesus Christ are simply in the world—physically present—but not of it, not part of its values (John 17:14-15). As believers, we should be set apart from the world. This is the meaning of being holy and living a holy, righteous life—to be set apart. We are not to engage in the sinful activities the world promotes, nor are we to retain the insipid, corrupt mind that the world creates. Rather, we are to conform ourselves, and our minds, to that of Jesus Christ (Romans 12:1-2). This is a daily activity and commitment.
We must also understand that being in the world, but not of it, is necessary if we are to be a light to those who are in spiritual darkness. We are to live in such a way that those outside the faith see our good deeds and our manner and know that there is something “different” about us. Christians who make every effort to live, think and act like those who do not know Christ do Him a great disservice. Even the heathen knows that “by their fruits you shall know them,” and as Christians, we should exhibit the fruit of the Spirit within us.
Being “in” the world also means we can enjoy the things of the world, such as the beautiful creation God has given us, but we are not to immerse ourselves in what the world values, nor are we to chase after worldly pleasures. Pleasure is no longer our calling in life, as it once was, but rather the worship of God.