Due to the increasingly pronounced inflow of people into cities and the problems arising from modern urban environments, the future and existence of cities as such is being called into question. Solutions based on technological innovations have been increasingly emphasized in the last decade to help in the fight against the emerging problems of urban life. Thus, as a logical sequence of development, this means the transformation of existing cities into smart cities. The aim of this final thesis is to present the concept of a smart city along with the economic benefits derived from its application. The smart city model is divided into sections of smart infrastructure, smart society and people, smart governance, care for the environment and it is often coupled with the idea of smart mobility and smart economy. The majority of these smart solutions is based on ICT networks, Internet of Things, Geographic Information System, Big Data and similar technology. Several ways of financing a smart city are covered in more detail throughout the paper, and numerous examples of good practice from around the world and Croatia are being mentioned. Further analysis of the current state of condition in Croatian cities revealed a lack of attention paid to traffic solutions and waste management. This is also supported by the results of the conducted survey in which citizens predominantly expressed their dissatisfaction in the above mentioned segments of their city. Furthermore, one of the goals of the conducted survey was to find out the familiarity of the broad public with the concept and terminology of the smart city, and the results have shown a slight advantage on the side of unfamiliarity with the topic and concept of a smart city. At last, it was concluded that there is room for progress, but the cooperation of all stakeholders, both private and public, is necessary if the ultimate goal is to create a better place to live.