Can't backup my iPhone to iCloud or iTunes?

Ok this might sounds confusing - I don't have enough icloud space to backup my iphone, so I want to back it up to itunes. However this is my first time connecting my iPhone to iTunes and I have the option to either 'Set up as new iPhone' or 'Restore from this backup'. My last backup was a month ago and If I choose the second option i'm afraid all my data (photo's etc) from the last month. I can't back it up because I have no iCloud space, which is the reason i'm doing all this.

Setup as a new iPhone, it will not overwrite anything. It will start syncing to your local computer.

DO NOT RESTORE FROM THIS BACKUP. If you restore, it will overwrite stuff.