If the grass is successfully preventing erosion and the hill is mow-able, it might be best just to leave it as it is.

It would help to see a photo. Failing that, can you describe the size of the area, and the degree of slope/how high it is vs. the depth of that area?

Also, how many years will it be before you plan to build the wall? [Almost any change you make will delay having enough money to build a wall.]

How much can you spend to replace the grass with something else? How large is the area that would have to be re-planted? If you choose to re-plant, how do you feel about needing to weed the area until the new plants are established (particularly if mulch will not hold in place on the slope)?

How often do you mow? Could you simply mow the hill less frequently -- maybe half as often as you currently mow the flat areas of the lawn?

Would it be worth it to pay someone else to cut the slope?