All the space of the phone is not available to you. The information when you purchase the phone or look up its specifications online are showing you the full amount of the space, not what is available for you to use.
A lot of the space is taken up by the OS (Android) and any preinstalled apps. What is left after that is what you have access to. There is no way to change that other than to uninstall any apps you don't use, if they are able to be removed (some preinstalled ones cannot be removed) and try clearing your cache of apps. This removes the data they store on the phone so be careful which ones you do that with.
Also, don't keep all your messages (text/mms) on the phone or all your other data from apps like facebook, etc. They just take up more and more space and should the phone die, get lost, stolen, need to be reset, etc., you would lose it all anyway. So it is best to save things off of the phone.