Q. John writes in his first epistle, “Whoever has been born of God does not sin, for His seed remains in him; and he cannot sin, because he has been born of God.” Does this imply that if I fail to be perfect in every way after having passed through the waters of baptism, I am therefore fooling myself about my salvation? Does that mean I have not really been born of God? I understand that we are called to “be perfect, as our heavenly Father is perfect,” but where does one draw the line insofar as recognizing that, once saved, my propensity to sin has transformed into a propensity to actively, daily, turning from my sin nature and identifying with Christ’s righteousness?
I think it’s important to recognize the context of John’s statement. His first epistle was written to counteract the influence of false teachers who were causing divisions within the community of Jesus’ followers. Under the influence of Greek philosophy, which valued spiritual realities but denigrated physical things, they were denying that Jesus Christ had “come in the flesh” (that is, in a real human body). John is writing to give his own eyewitness testimony that Jesus was truly human and that God had sent him into the world as the Savior: “That which was from the beginning, which we have heard, which we have seen with our eyes, which we have looked at and our hands have touched—this we proclaim concerning the Word of life. The life appeared; we have seen it and testify to it, and we proclaim to you the eternal life, which was with the Father and has appeared to us..”
So John is able to offer eyewitness testimony to dispute the claim that Jesus was not truly human. But John also points out that the false teachers and the people they are influencing are also discredited by their own sinful lives. They seem to have been indulging in sin because they believed that what was done in the body didn’t affect a person’s spirit. “Whoever claims to live in [God] must live as Jesus did,” John insists. “Whoever says, ‘I know him,’ but does not do what he commands is a liar, and the truth is not in that person.”
So what John is saying, in essence, is that we shouldn’t live as if what we did in our bodies didn’t matter. We will not continue to live that way if we have been truly born of God.
And so I think your summary is quite accurate: The idea is that our propensity to sin is transformed into a propensity to turning away from sin and leading a Christ-like life of holiness. Many English translations now reflect the understanding that John is talking about a process, not an instant result. For example: “No one who is born of God will continue to sin” (New International Version); “God’s children cannot keep on being sinful” (Contemporary English Version); “Those who have been born into God’s family do not make a practice of sinning” (New Living Translation).
So, you are not fooling yourself about truly being a Christian if you’re not perfect in every way. Look at the trajectory: Are you moving steadily forward into “living your life as Jesus did,” by the transforming power of the Holy Spirit within you? If so, rejoice, and set your mind at ease.
Good Question 
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