Since your '86 is the carbureted 2.3, (assuming nobody has done an engine swap and upgraded to EFI) then 14-16mpg or so isn't too bad in town for a car that old. A good tune up, maybe a carburetor rebuild and tuning and either gutting the factory cat or going for a high-flow one will all help, but don't expect to hit the 20mpg mark (in-town) unless you short-shift regularly and baby the go-pedal. The old carbureted 2.3s really shined on the highway with 25mpg or better not being out of the question, but in-town they're like any other carbureted car and tend to be quite a bit thirstier than their EFI counterparts. My EFI '88 Mustang 2.3 could do 21mpg in town no problem, and nearly 30mpg on the highway until the
tranny lost overdrive and 3rd, but my '74 with it's carbureted 2.3 was lucky to see 17mpg in town, but could do 32mpg highway when it was stock, I have no clue what she does fuel mileage-wise with all of my modifications. (probably a lot worse).
Some parts that'll help your 2.3 be a little less thirsty are:
Spark Plugs: NGK V-power Part #TR5-1 (Source #7060, some parts stores use NGK's part number, others use the source number)
Plug Wires: Motorcraft Part #WR4011C
Air Filter: K&N Part #E1200
The NGK V-power plugs seem to be the best for the 2.3 overall, with Bosch Platinum (single electrode, not the +2 or +4) being a close second, though the NGKs will usually last longer in a carbureted engine.
The Motorcraft Wires are the best direct-fit wires you'll find for your 2.3, to do any better you'll have to buy a universal set from MSD, Accel, Mallory, etc. and cut and crimp to fit (not something I'd recommend to an absolute beginner unless you had help from someone who's done it a time or two).
The K&N filter can make a difference, but it's likely to be no more than .2-.5mpg in-town and with a carbureted engine.