This paper analyzes the budget of local self-government units on the example of the Radoboj Municipality. The municipal budget is very important and crucial for meeting the living needs of the population living in the area and for implementing economic development, which is a prerequisite for the development of a social standard. For the purposes of the work, a survey was conducted to analyze income and receipts to cover expenditures and expenditures under the jurisdiction of local government units. I am of the opinion that responsible management and good budget planning would provide a better standard of living for the people living in the area. The functioning of local self-government and their budgets was further explored through a theoretical concept and a critical review of the problems of functioning of this complex system was made. The results of the research present the breadth and importance of local self-government in contemporary society and indicate the importance of local budgets in the process of creating the social standard of people living in the area. The analysis of the budget of the Municipality of Radoboj over a period of four years (2014- 2018) shows that the local budget is a key factor for the development of the local community as well as for organizing social life in that community. The analysis has shown that the current territorial structure of local units favors the further strengthening and development of local self-government units and that decentralization of fiscal capacity would contribute to the improvement of the current state of local self-government in the Republic of Croatia. Accordingly, strengthening local units would make the economy stronger, resulting in the retention of young people and the general satisfaction of the community living in the area.