I know Sri Lankan locals who work full time jobs who make the equivalent of $150 AUD per month, even less, and they are happy and if you asked them they would say they are living comfortably and content.
On the other hand I know expats who make $1000-$2000+ AUD and claim that its not enough and they are struggling to make ends meet.
So I will say this, what kind of life style do you want to live here? Do you want to be going out partying every weekend? Do you want to be renting a 5 bedroom villa on the beach? Do you want to be going out for seafood banquets every night? Do you need to be getting tuk tuks or private cars to drive you around everywhere? If you are answering yes to these questions, then sure you will be needing atleast $1000-$2000 AUD to get by, if not more.
However, if you are content renting a small 2-3 bedroom local house, eating rice and curry regularly or cooking your own food at home, taking the bus around or riding a bicycle wherever you need to go, then life can be very very cheap and financially very stress free.
To give you a bit of an insight, currently as a write thise I am renting a nice little 2 bedroom house in Unawatuna (Southern Sri Lanka). The rent on the house is 20,000 rupees per month ($170 AUD). It has a nice big backyard and everything I need in a house. It is about 1km from the beach which only takes me 5 minutes to ride my bicycle, which cost me around 12,000 rupees brand new, (roughly $110 AUD). If I need to go into Galle there is a bus stop right near my house, and the trip costs me around 20 rupees each way (18 cents AUD) or if I need to make the trip up to Colombo for some reason I tend to take the train, which is roughly 200 rupees (under $2 AUD). I get take away rice and curry or fried rice packets regularly, which cost around 120-300 rupees depending on what exactly I get and where I get it from (around $1-$3 AUD), or I sometimes cook at home (However once I discovered take away meals its hard to pass up a delicious and massive meal cooked for you for just over $1!). When I cook at home I tend to stay away from imported foods, as they tend to really add up, and just stick to the local stuff, except for the occasional luxury here and there of course!
Other than that I just have the occasional standard expenses, such as bills, internet etc, all of which cost very minimal.
When I was setting up my business I did have some larger expenses to cover, however I had planned for that, but outside of that as you can see it is very very cheap to live here if you chose to embrace the life style and the culture. I personally believe that people only find it an expensive place to live if they want to live the lifestyle they are used to back in western countries, however if you are coming here to live, you need to adapt to the life style, not try to have the life style adapt to you.