Thermastat is reading colder than the actual temperature of the room

The most likely problem is the wall on which the thermostat is mounted. The thermostat is designed to read the temperature of the space in the room, but if the wall is exceptionally warm or cold it can really throw off the actual reading.
Options might be to stuff insulation into the wall behind the thermostat, or relocate it to a wall that is more consistent in temperature with the actual temperature in the room.

It sounds like your heating system has to little capacity to heat the home properly. 21 degrees is a reasonable temperature to expect but if the unit is running all the time and can't reach 21 degrees the heater is too small.
As far as setting the thermostat here is a link to the instructions.
http://www.salus-controls.pl/data/product/attach/rt300rf_-_eng.pdf

A thermostat only cuts the heating off when the temperature it is set to is reached while the heating is on. If the heating is set to off then the thermostat will do nothing.
Generally you want to think about when you want your heating to come one and off by using the timer and then the thermostat is just used to ensure that you don't waste energy by exceeding the maximum comfortable temperature.

Hope this helps a little.

If you set both in the middle settings thats generally best. 1 is the on/off and compressor control to run the box temperature, the remaining will say colder /warmer, this can be misleading however as colder actually is colder freezer! not reefer box! so to max that one actually makes the reefer warmer and freezer colder!

Hello,

yes, its possible, but don't over look other areas that could be the cause of the problem.

You can follow the troubleshooting steps below as you might get to the root of the problem:

1. Check that the temperature control knob isn't in the "off" position.
2. Move the temperature control knob to a colder temperature setting.
3. Check that the fridge isn't unplugged or that the fuse or circuit breaker isn't blown. Reset the circuit breaker or replace the fuse as needed.
4. Make sure the red defrost button hasn't been inadvertently pushed. If the button is pressed the fridge will run through its defrost cycle. You can't turn the cycle off until it has completed. Part of the defrosting function includes warmer temperatures
5. Determine if the ambient temperature has become hotter. For example, is the weather warmer than when you initially set the fridge temperature, or is the air conditioning set higher? If so, set the temperature control one step colder.
6. Determine whether you are opening the fridge door more often than usual, or if a food package is keeping the door open. Remove any obstructions.
7. Make sure the door seal isn't dirty and preventing the tight contact required. Wipe the seal on both the door and the body using a soft cloth and warm water.
8. Make sure the fridge hasn't been built-in or placed in a too tightly confined space. If it is, the hot wall condenser won't work properly. Test this by pulling the fridge out into the room to see if the temperature stabilizes.

Good luck.

Lowering the temperature setting doesn't change the temperature of the air coming out of the unit it just lets it run until the room temperature gets colder. Check the temp of the air coming out of the unit. If it isn't as cold as it used to be the charge could be low. First though you should make sure the filters are clean and the coils.You should also check the actual room temp. It's also possible the unit doesn't have enough capacity to keep up with the cooling load of the room.

does the compressor run ? if so you could have a low refrigerant charge, a sealed unit resrtiction, leak or defective compressor.

the outside temperature sensor on vehicles takes the temperature of the air about 2-3 inches off the ground, that close to the ground it might be a couple degrees colder than the temperature on the thermometer you have mounted in the window of your house.

Where are you measuring the indoor temperature?
To compare it to the thermostat temperature you have to measure both temperatures at thermostat.
The thermostat will only control the temperature at the thermostat, not any where else in the room.
The room temperature depending on insulation in walls and ceiling and distance from outside wall and outside temperature, can be as high as 10° difference from outside wall to inside wall of house.
The lower the outside temperature, the greater the room difference in heating. The higher the outside temperature the greater the room difference in cooling.