We spent 6 weeks travelling through Central America, although we could have easily spent more time. The ideal time would be minimum 2 months if you wanted to stop off in every country, however we pretty much did two weeks in Mexico, Guatemala, and Nicaragua, only stopping for a day in the countries between. Beginning in Mexico was the perfect start to the trip, we spent two weeks relaxing on it's beautiful white sandy beaches, before heading to Guatemala for a more action packed, culture filled couple of weeks. Nicaragua is party central, and has some fab hostels which really made our time there special. Because we are travelling on a budget, we didn't spend time in Costa Rica or Panama, but do dream of going back one day perhaps when we've made our fortunes!
One thing to beware of when planning a budget for Central America is the border crossing fees, something we got unknowingly got stung with. You must beware, as there are never signs saying what the actual fee is, and there are always scammers at the border trying to get rich off of every tourist trying to enter. On leaving Mexico we were charged the equivalent of £20 as an exit fee, but then were also charged the same to enter Belize (even though we were literally passing through and not stopping). One way to avoid this is to ask for a receipt, and they tend to miraculously change their minds.
On another money note, Mexico is a lot more expensive than Guatemala and Nicaragua, so don't feel shocked if you are getting through your cash slightly quicker than intended at the start!
Although we felt safe 99% of the time in Central America, it is important to keep your wits about you and use general precaution especially when out drinking in the evenings. Locals are friendly but these countries have severe poverty areas so theft can be a problem, especially as white 'gringo' travellers.
Getting around is generally done by 'colectivos' which are like shuttle buses, you can always arrange this from hostels. There are also local buses called 'chicken buses' which are much cheaper, however take much longer and can often be over crowded with no seats, but if you are on a real budget they are definitely more cost effective.