There are different approaches I guess but because it must also relate to a selection I would use a global variable for a position so it could be 0, 1 or 2. When you press down it adds 1 to variable, when you press up it subtracts 1 from variable, and another check would ensure it doesn't go below 0 or above 2.
Then you could relate the variable to the position and also the menu to go to. If variable=0, set Y position so it is over NEW GAME, if var=1, set Y position so it is over CONTINUE etc.
Then for going to next level you can say on enter button pressed, if variable = 0, start new game, if =1 load game, if =2 load options layout etc.
An RPG is a big task though, maybe it's worth asking for help in a team assuming you are an artist. Good luck!