Currently when an iPhone has its operating system upgraded, Goodbudget recognizes it as an entirely new phone. However, to prevent a penalty for simply updating your phone, multiple instances of the exact same phone will not contribute to your device limit, though they’ll show up as separate lines on the Manage Devices page. Because of this, it’s possible to have a quantity of devices connected to a household that’s technically over the device limit (2 on the Free plan, 5 on the Premium plan).
Normally these “extra” devices can accumulate without issue, however, when adding a new phone, all of the listings count as separate devices, so simply deleting a listing of your old phone will not make room for the new one, the total number of listings on the Manage Devices page will need to be under the device limit.
In this case, to get your new phone added, you should revoke all instances of the phone being replaced, then all but the most recent instance of the phone you want to keep, which should drop you below the device limit and allow you to add your new phone.