How can we have free will if God knows everything?

We can't.

It is impossible for us to fully understand the relationship between God’s sovereignty and man’s free will and responsibility. Only God truly knows how they work together in His plan of salvation. With this doctrine, probably more so than with any other, it is crucially important to admit our inability to fully grasp the nature of God and our relationship with Him. Going too far to either side results in a distorted understanding of salvation.

Scripture is clear that God determines who will be saved (Romans 8:29; 1 Peter 1:2). Ephesians 1:4 tells us that God chose us “before the creation of the world.” The Bible repeatedly describes believers as the “chosen” (Romans 8:33, 11:5; Ephesians 1:11; Colossians 3:12; 1 Thessalonians 1:4; 1 Peter 1:2, 2:9) and the “elect” (Matthew 24:22, 31; Mark 13:20, 27; Romans 11:7; 1 Timothy 5:21; 2 Timothy 2:10; Titus 1:1; 1 Peter 1:1). The fact that believers are predestined (Romans 8:29-30; Ephesians 1:5, 11) and elected for salvation (Romans 9:11, 11:28; 2 Peter 1:10) is clear.

The Bible also says that we are responsible for receiving Christ as Savior. If we believe in Jesus Christ we will be saved (John 3:16; Romans 10:9-10). God knows who will be saved and God chooses who will be saved, and we must choose Christ in order to be saved. How these facts work together is impossible for a finite mind to comprehend (Romans 11:33-36). Our responsibility is to take the gospel to the world (Matthew 28:18-20; Acts 1:8). We should leave foreknowledge, election, and predestination up to God and simply be obedient in sharing the gospel.

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Well, I always think about it as there being two sides to a story, and that God knows both outcomes, but it's up to us to make the final decision about which path we end up on. The choice is still ours to make.