If you’re finishing your attic, insulating can be a little more complicated. First, you’ll have to give up some space. Attics require a high R-value, and you need a couple inches of clearance for ventilation on top of that.
You can add depth to the existing rafters by cross strapping or by adding 2x4s along each rafter. Then leave a dropped ceiling near the peak or ridge. (Position your roof vents here; if you have dormers, they should be vented, too.)
Between the rafters, install plastic or polystyrene channels. These keep insulation away from the roof, allowing for air circulation. The top of these channels should vent into the open area at the peak where the air escapes through roof vents. The bottom will be open to the soffits, which should also be vented. (Older homes may have solid wooden soffits covered by vented aluminium; you’ll need to remove the wooden soffit or drill holes in it.)
Just outside the top plate, install insulation stops to prevent the insulation from blocking these vents.
Then install your insulation. Batts are convenient, but rigid foam insulation gives you a little more R-value per inch, important when space is at a premium.
Next, cover the insulation with a continuous vapor barrier, doubly sealed at the seams with acoustical sealant. You should also try and seal as much as possible at the end of the attic floor joists, as this is an easy channel for moisture escape. You can install rigid foam insulation between the joists, supplementing it with spray foam insulation. Then finish the walls.
If space is really tight, you can add insulation on the outside, over the existing roof, then resheath and reshingle the roof. But needless to say, this is a big job.